Do I need flood insurance?

As Storm Aileen rages across the country, now may be a timely reminder of the importance of flood insurance.

Flooding is one of the major risks typically included in many standard forms of property insurance – the extent of damage caused by flooding may be considerable and although any claims may generally attract a relatively high excess, home owners, buy to let landlords and property investors as a whole consider it important to have this important line of defence in their arsenal of insurance headings.

Assessing the risk

As with any other aspect of property insurance, insurers need to assess the risk of particular events when deciding whether to extend cover and, if so, the price of the premiums necessary.

In the case of flood risks, the most important considerations, from the insurer’s point of view is the record of past claims for flood damage to the property in question or its vulnerability to the possibility of flooding from swollen rivers or surging sea tides, as mapped by the Environment Agency’s Flood Map for Planning.

Upon discovering a history of past flood claims, or the location of the property in an area identified to be at risk from flooding, an insurer might:

• decline any application for the requested property insurance;

• agree to arrange cover, but with the specific exclusion of flood risks; or

• arrange the requested property insurance, but at an increased premium rate – one that reflects the enhanced risk of flooding.

Flood insurance

Fortunately, there are specialist insurance providers able to match your need for flood insurance – even if your property has been judged to be vulnerable to such risks – with insurers offering non-standard forms of property insurance which specifically provide cover against flooding.

Such non-standard property insurance provides the protection you may need against the risk of flooding, yet at a competitive price.

Flood Re

With respect to owner occupied residential property, these attempts to ensure that flood insurance remains available to those who need it and may buy it at a competitive rate, are made somewhat easier thanks to an initiative called Flood Re.

This initiative – undertaken by the insurance industry and the government in concert – provides the necessary financial backing for participating insurers to continue to offer flood insurance. The backing comes in the form of a re-insurance scheme, whereby participating insurers pay a modest re-insurance premium to cover any heightened risk in meeting flood insurance claims from owners of vulnerable residential property. With that backing, insurers gain the confidence of lowering the cost of flood insurance to their customers.

As the insured, however, you might have no reason to be aware of Flood Re, which continues to work entirely in the background. You have no contact with the re-insurance mechanism, but continue to conduct all of your insurance requirements and claims as normal through your insurance provided. You are unlikely to know that Flood Re is even there.

In these ways, the insurance industry is better equipped to deal with any surge in flood claims following bouts of extreme weather – difficulties which have certainly been encountered in the past – and home owners have the confidence and peace of mind in being able to arrange the flood insurance they need, even when their property is located in an area of flooding in the past or is vulnerable to flooding in the future.