Insurers are paying out £7 million a day for home insurance claims just for burst pipes after the big freeze. Shock snow storms and freezing temperatures were blamed for a huge increase in the number of claims.
Specialist insurer for the elderly, Age UK, says claims from their customers for weather-related claims soared by 390% in December and those for water damage were up 247%, compared with December 2009.
Pay outs to repair homes after the freezing weather at the end of 2010 are likely to push up the costs of home insurance for everyone. Nevertheless, extensive flooding is also costing insurance firms a fortune as well.
Industry insiders reckon insurance companies are stockpiling cash to meet weather-related claims but still need to raise premiums to meet the bills.
Water damage claims flood in to insurers
The cost of buildings insurance already stands at a record high of £143 – 10.3% up on prices at the end of 2009.
Contents cover averages about £72 – up 8.3% for the year. Combined policies are setting home owners back about £200. These policies increased in price by just under 5% for the year.
Simon Douglas, director of AA Insurance, who compiled the figures, said: “Flood claims are increasing in number and unpredictability.
“The early winter brought a huge increase of snow and ice related claims for the second year running – in fact the Association of British Insurers estimates that the industry is paying out £7 million per day for burst pipe claims.
“There does seem to be a pattern of weather extremes developing.”
Many homeowners fear they will lose cover for flooding in 2013, when an agreement between home insurance companies and the government ends. The fear is several million homes will become uninsurable because the government is cutting flood prevention measures as part of the comprehensive spending review.