Floods dampen prospect of cheaper home insurance

Britain’s long, wet and miserable summer has cost home insurance firms £400 million in pay outs for flooding and storm damage.

The claims have pushed the cost of home insurance up – 2.4% on buildings cover to an average £181 and contents cover rose 1% to an average £242 a year, according to figures from the AA.

Every region saw premiums increase.  London and the South East are the most expensive regions for buildings insurance, costing an average £200, up 2.9% over the three months ending September 30.

The biggest regional increases were in Yorkshire and East Anglia, which saw costs leap 3.5% to £177.

Wales and the West Country have the cheapest buildings insurance at an average £157, up 1.1% over the quarter.

Central and North West England had the highest contents cover at £101, an increase of 0.7% over the quarter.  In Wales, contents insurance costs dropped 0.6% to £84.

The cheapest contents cover is in Scotland and the West Country, at £79.

Simon Douglas, director of AA Insurance, explained home insurance costs could still go up more as predictions suggest heavy rainfall will become more common over coming decades, making some areas up to 10 times more liable to flooding.

“I am concerned that no agreement has yet been reached in finding an affordable option to the ‘statement of principles’ between the insurance industry and the Government, which ensures that families in flood-prone properties can continue to obtain flood cover,” he said.

“This expires in June next year and if no agreement is reached soon, could lead to the most vulnerable homes becoming uninsurable.

“To put this into context, insurers measure flood risk in terms of events likely to happen over a period of years.  Even if a home is at risk of flooding once in a century, given that the average cost of repairing a flood-damaged property is £20,000 that is the equivalent of £200 per year, on top of the cost of covering other risks.”

As a case in point, he explained that £38 million that was spent on flood defences in Carlisle following serious floods there in 2005. Last month, although some properties in the area were flooded following exceptional rainfall, the new defences kept around 1,500 homes in the city dry.

“That represents a return of at least 100% in terms of the cost of mopping up and damage to property that has been saved,” he said.

Read more on what to do in a flood here

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One Response to Floods dampen prospect of cheaper home insurance

  1. Jason McClean says:

    Don’t be put off by the scaremongering, good specialist brokers will fight for your business and the competition will keep costs down.

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