Insurers may pull plug on insuring flood risk homes

Buy to let insurance firms are threatening to the pull plug on policies for homes at risk from flooding.

Around 25% of all homes in England and Wales could end up under water if the government fails to pledge cash to renewing flood defences under a long-standing agreement with home insurers.

The insurers agree to cover at risk homes until June 2013 on condition the government pumps cash in to flood defence schemes.

However, the government has scrapped or shelved many flood protection schemes under spending cuts – and industry experts are worried many homes will lose value and become unmortgageable unless a new agreement is reached soon.

Many landlords will breach the terms of their mortgages if they do not have a buildings insurance policy in force – and lenders will not advance funds on properties that cannot be insured.

Landlords taking out buy to let insurance from June may face problems with cover – or massive price hikes as annual policies from June 2012 include cover from when the agreement ends next year.

Searchflow, a property research firm that handles property searches for conveyancers has highlighted the problem.

Richard Hinton, business development director at SearchFlow, said: “Buyers will be able to obtain flood insurance for the next few months, the long-term prospects of properties at risk of flooding are potentially bleak.

“Buyers purchasing in high-risk flood areas face the possibility of very high premiums, significant reductions in value, less access to mortgage finance – even action taken by the mortgage lender due to breach of the mortgage agreement – is high.”

To find out if you have property in a high risk area, go to the Environment Agency flood pages and enter the post code

Searchflow cites some buy to let insurance firms demanding excesses of up to £20,000 from some home owners as an example of how a breakdown in the agreement could affect policies.

This entry was posted in Home Insurance. Bookmark the permalink.

One Response to Insurers may pull plug on insuring flood risk homes

  1. Sounds frightening but the fact is a good specialist provider will combine the Let and Flood requirement into a policy. The agreement between Government and the Insurers (the Statement of Principles, which encourages quoting on flood risk) runs out in 2013 but the market will react and provide cover for Let Flood property. It’s for this sort of insurance that you need the specialist and that’s where The Property Insurer excels – it compares standard home insurance policies for the best prices but also provides the tough, harder to get insurance such as Flood and Let combined through specialist providers.

Leave a Reply

Your email address will not be published. Required fields are marked *