The financial impact of the floods on your home

As the wettest weather for years batters Britain – and the cost of cover look set to climb again – Simon Read has advice that could stop you being left high and dry by insurers

The insurance costs for this year's floods could top £1.5bn and end up adding around £15 to the average annual household cover.

The insurance industry has to date only published figures relating to storm damage over Christmas and the New Year, but even by 8 January the bill had climbed to £426m.

On Monday, accountancy firm PwC revised its forecast for the flooding cost in December and January upwards to £630m.

But with floods spreading in recent days to more high-density and high-cost areas such as Surrey, the bill could treble by the time the floods recede, insurance industry insiders reckon.

The last similar catastrophe was the floods of 2007, which ended up costing insurers around £3bn.

This time around, the most severe predictions put the bill at a possible £1.5bn. If the clean-up cost is that high, it could lead to a 5 per cent rise in buildings cover, which would work out as a £10 to £15 hit for each household.

However, there are set to be higher bills ahead for homes hit by floods under new proposals included in the Government's Flood Re agreement with the insurance industry, which is due to come into force next year.

Under the plans, a fund will be set up to provide payouts on properties that insurers are unwilling to cover.

The insurance industry will be asked to pay the premiums for the high-risk properties, through a levy of £180m a year, which is the equivalent of £10.50 a year on all household insurance policies.

But the industry has promised that it will not pass on the extra costs to all households. Instead, those in flood-prone areas will pay up to £540 a year for the flood-insurance element of their buildings insurance.

The proposals are aimed at ensuring no homes are left uninsurable, but they exclude leasehold flats, SMEs and private rented properties which, according to the British Property Federation, will mean that more than 5m homes and 4m businesses will not have access to the scheme. Ian Fletcher, director of policy at the Federation, warned: "By excluding millions of properties from its new flood insurance scheme, the Government is exposing people's homes and livelihoods to risk, greater financial burden and insecurity."

Insurers this week warned that thousands of homes in the Thames Valley and Somerset Levels, the areas worst-hit by current flooding, could be affected by the loophole.

How could the floods hit your property value? Homes that get flooded can see their values fall by as much as a fifth, especially if they are hit more than once. Potential buyers are obviously deterred by the clean-up costs and soaring insurance premiums.

But there is little evidence that floods actually make a home unsellable. Tewkesbury in Gloucestershire, for instance, was hit by severe floods in 2007 but while prices took a dip, average property values in the town have held up reasonably well.

It's a similar story at Cockermouth in Cumbria, which was hit by floods in 2009.

In fact, some buyers look to flood-hit areas to pick up a bargain, reckoning that spending a few grand on decent flood protection could make the deal worthwhile.

Alex Gosling, managing director of online estate agent HouseSimple, warned: "Homeowners may not see a noticeable drop in the price of their property if the flooding is a one-off event, but those with properties that are flooding repeatedly face the biggest headache.

"If buyers are going to struggle to secure mortgages on a property that has a high risk of flooding, or insurance premiums are going to be sky high, then that will have a detrimental impact on the price of the property.

"Plus it's much easier for buyers these days to identify areas of flood."

A man steps over sandbags in front of a property in Gloucester (Getty Images) A man steps over sandbags in front of a property in Gloucester (Getty Images)
Homes that have not been flooded but are close to flood-hit areas could also find their property values falling as buyers prove reluctant to take the risk.

The Environment Agency has suggested that one in six homes in England is now at risk of flooding, which potentially leaves millions facing a hit to their home values.

Specially highly sought-after homes with water views may find the premium they have previously been able to charge for their view disappears as fears grow about flooding.

But James Wyatt of the Surrey estate agent Barton Wyatt said owners of riverside homes need not worry over the long-term: "People have short-memories – the floods of 2014 will be a distant memory in five years' time, and the lure of a riverside property will be as strong as ever."

The risk can be minimised by anti-flood measures but still may not be enough to make homes prove attractive to the wide number of potential buyers needed to achieve a decent price.

If you are forced to make a claim due to flooding, insurers have promised to speed things and made a number of other commitments to help those who have been hit.

Axa is typical in that it has pledged £1,000 as emergency payments for affected homes as well as offering alternative accommodation and setting up a 24-hour helpline.

"As soon as the flood waters retreat, we will be there to help our customers rebuild their lives by offering every ounce of support we can and by processing their claims as quickly and as sympathetically as we can," Paul Evans, chief executive if Axa, promised.

Katie Lomas of Direct Line said: "We have put our emergency action plans into place. We have people on the ground in affected areas and on the phones ready to help customers make a claim. Our priority is getting people back in their home as quickly as possible."

If your insurer fails to deliver on its promises, you can take your claim to the Financial Services Ombudsman. It said this week that it finds in favour of the consumer in more than four out of 10 complaints about building insurance it receives.

Meanwhile, if you're worried about potential flood damage to your home, the Ombudsman advises there are things you can do to protect yourself.

Speak to your home insurer to find out what you're covered for. Even if you have to pay higher premiums, it pays to know you're covered if something goes wrong.

Ask your insurer if they have any tips or requirements for preventative measures that you could take.

Keep copies of your insurance documents in a safe place. Scan and save the documents too in case the originals are damaged.

Take pictures of your property to show the condition it was in before flooding. This could help you out in a claim.

Simon Douglas, director of AA Insurance, said: "If there is a real prospect of your home being flooded, move valuable items and small items of furniture upstairs or place them on tables or worktops."

He advises people to be especially careful to protect family heirlooms, pictures or documents that can't be replaced: "Such things may have little monetary worth but considerable emotional value. It would also be good advice to move your car to higher ground if you can, away from potential flood water.

"Keep your phones fully charged, your important documents handy and keep warm, waterproof clothing ready in case the emergency services advise that you should evacuate your home. As you leave, make sure your doors and windows are locked, too."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
News
Cleopatra the tortoise suffers from a painful disease that causes her shell to disintegrate; her new prosthetic one has been custom-made for her using 3D printing technology
newsCleopatra had been suffering from 'pyramiding'
News
people
Arts and Entertainment
Coachella and Lollapalooza festivals have both listed the selfie stick devices as “prohibited items”
music
Voices
Nigel Owens was targeted on Twitter because of his sexuality during the Six Nations finale between England and France earlier this month
rugbyReferee Nigel Owens on coming out, and homophobic Twitter abuse
Life and Style
Gold timing: the Apple Watch Edition
tech
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Sheridan Maine: Accounts Assistant

    £30,000 Annual: Sheridan Maine: A fantastic opportunity has arisen for a perso...

    Richard Bishop: Accounts Payable Clerk

    £11 - £13 Hourly Rate: Richard Bishop: Are you looking for a purchase ledger r...

    Jemma Gent: Management Accountant

    £250-£300 Day Rate: Jemma Gent: Are you qualified accountant with previous exp...

    Richard Bishop: Accounts Payable Clerk

    £11 - £13 Hourly Rate: Richard Bishop: Are you looking for a purchase ledger r...

    Day In a Page

    No postcode? No vote

    Floating voters

    How living on a houseboat meant I didn't officially 'exist'
    Louis Theroux's affable Englishman routine begins to wear thin

    By Reason of Insanity

    Louis Theroux's affable Englishman routine begins to wear thin
    Power dressing is back – but no shoulderpads!

    Power dressing is back

    But banish all thoughts of Eighties shoulderpads
    Spanish stone-age cave paintings 'under threat' after being re-opened to the public

    Spanish stone-age cave paintings in Altamira 'under threat'

    Caves were re-opened to the public
    'I was the bookies’ favourite to be first to leave the Cabinet'

    Vince Cable interview

    'I was the bookies’ favourite to be first to leave the Cabinet'
    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat
    Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

    Saudi airstrikes are fuelling the Gulf's fire

    Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
    Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

    The only direction Zayn could go

    We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
    Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

    Spells like teen spirit

    A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
    Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

    If fashion is a cycle, this young man knows just how to ride it

    British designer Jonathan Anderson is putting his stamp on venerable house Loewe
    Number plates scheme could provide a licence to offend in the land of the free

    Licence to offend in the land of the free

    Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
    From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

    From farm to fork in Cornwall

    One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
    Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

    Robert Parker interview

    The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
    Don't believe the stereotype - or should you?

    Don't believe the stereotype - or should you?

    We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor