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
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
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

    Recruitment Genius: Software Development Manager

    £40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Day In a Page

    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee