Millions could be left without affordable flood insurance

But home insurance premiums are still falling despite floods

The British Property Federation and the Council of Mortgage Lenders have warned that exclusions in the types of property to be covered by the Government’s Flood Re proposals will leave "significant" numbers of homeowners unable to get affordable flood insurance .

As currently defined, Flood Re will exclude most buildings cover for leasehold properties, the entire private rented sector, Housing association homes, new-build homes constructed after January 2009 and properties in council tax band H.

Flood Re will replace the ‘Statement of Principles’ through which insurers offered affordable flood coverage to at risk households in return for Government spending on flood defenses. The Flood Re proposals are expected to become part of the Water Bill in mid-2015.

"Every property that is occupied is somebody’s home and investment," said Ian Fletcher, Director of Policy at the BPF. "Flood doesn’t discriminate between freehold and leasehold, owner-occupation and renting, and it is of small comfort having contents cover if the building itself is left uninhabitable. If a property is at risk, regardless of its status, it needs to be able to insure itself affordably against disaster, not least because that is a condition of most mortgages.”

"Restricting the ability of landlords, particularly smaller ones, to insure their properties against flood risk will also impact on the speed at which communities recover from major flood events, if some properties are insured, but others are not because access to Flood Re excludes them. Tenants re-habitation process may be significantly drawn out and as a result local authorities will face the strain of providing lengthier temporary housing arrangements.”

Paul Smee, Director General of the CML, said: "We find it difficult to believe that the original policy intention was to exclude a whole swathe of residential property from the stated aim of ensuring that affordable flood insurance continued to be available across the market. Given that this appears to be an unintended consequence, we strongly urge legislators and the insurance industry to reconsider the proposals and ensure flood cover remains available on homes as people would expect."

Meanwhile, figures from AA Insurance indicate that despite the poor weather at the end of 2013, premiums for home insurance are still falling.

Its latest report  shows that the cost of buildings, contents and combined home policies all fell during the last three months of 2013 continuing the downward trend of the past two years. The average  quote for a combined policy was down 3 per cent over the last three months of 2013 to £165 and down 8.5 per cent over the year.

Simon Douglas, director of AA Insurance said: "Homes have felt the full force of the elements over recent weeks with insurers expected to meet claims in the order of £400 million. But over the year as a whole, the number and cost of severe weather claims are according to some estimates about 12% lower than in 2012 and significantly lower than the 2007 flood disaster."