The roof could cave in on flood cover if we let our defences go down

Insurers' commitment to 'high risk' homeowners may not endure, write Chiara Cavaglieri and Julian Knight

(STUART BINGHAM/EPA)

After the snow come the floods – February is a peak time in Britain for burst banks. And while insurers have a commitment not to cancel the cover of policyholders in "high-risk" areas, the longer-term security of homeowners could be under threat as a result of the Government's strained finances.

Agreed last year, the insurance industry's "statement of principles" on offering cover to people at risk of flooding is in place until 2013. But crucially, the continued provision of flood cover was based on the understanding that the Government would invest more money in flood defences. This commitment, though, was made before the recession took hold, and while the Government says the spending pledge will hold until 2011, there can be no guarantees after this date.

By 2011 the Government will be looking at massive spending cuts to start to repair the gaping hole in the public finances, according to the Institute for Fiscal Studies. So what are the chances of the extra cash being found to keep building flood defences?

"That's the big question," says Malcolm Tarling at the Association of British Insurers (ABI). "While you might never be able to eradicate the risk of flooding, the risk can be managed to acceptable levels that will ensure flood cover remains widely available and competitively priced."

In the run-up to last year's statement of principles and in the light of the 2007 summer flooding that cost billions of pounds, several insurers privately threatened that they would stop offering policies to those in high-risk areas. In response, the Government pledged to spend an extra £1.5bn on defences between 2009 and 2011. It was seen as the minimum needed to keep insurers onside. However, with the threat of global warming and rising sea levels, insurers expect much more will have to be spent over the coming decades.

If the insurers are twitchy, reasons can be found in figures from the Government's Environment Agency. These show there are around five million people living in flood-risk areas across England and Wales, and there are currently 11 low-level flood warnings in place, most of these in the South-west and Midlands. You can check if your area has been given a warning at www.environment-agency.gov.uk.

People can also sign up to the agency's free "Floodline Warnings Direct" service, which sends a text or email alert when a specific location is at risk of imminent flooding.

A property does not have to be sited near the sea or a river to be in jeopardy. Anyone living at the bottom of a hill, for example, may be vulnerable to heavy rainfall. Blocked sewers can also cause problems, so it is vital to check your home insurance policy carefully.

Despite the promise of renewal offers for existing policies, there is no obligation on insurance companies to provide cover for new customers. If you are having difficulties getting a policy, some providers may agree to cover you if you adhere to certain safeguards. There may have to be an agreed increase to the excess, for example, or proof that adequate changes have been made to protect the home from flood damage.

If you live in an area that is at particularly high risk, you could take protection a step further and make some more fundamental alterations to your property. For example, you could replace fitted carpets with ceramic tiles, or fit one-way valves to drains and water-inlet pipes to prevent surges coming up the drains. You could also opt for synthetic window frames and doors instead of wooden ones.

The idea isn't to prevent flooding but to be able to cope with its aftermath and keep the cost of repairs to a minimum.

The good news is that home insurance polices are highly competitive at the moment, with companies such as Tesco Personal Finance and the Halifax offering online discounts and cashback incentives. Premiums for household cover have been fairly steady over the past few years, despite the fear of increases after the summer 2007 floods. Unlike the motor cover industry, which continues to pay more in claims than it takes in premiums, the home insurance sector has been much more successful and was able to absorb the claims that took place during that time.

However, these competitive prices may not last long. "Premiums are likely to rise despite the extremely competitive nature of the home insurance market," says Simon Douglas, director of AA Insurance.

"Recent years have shown an increase in extreme weather events – not just flooding but high winds, extreme hail and tornadoes."

Mr Douglas adds that reinsurers, with whom insurance companies share their risks, may also have to change their arrangements to protect themselves against weather conditions that are powered by climate change. "All of this is being carefully watched by the industry and particularly by reinsurers, which are looking decades into the future as well as the shorter term. If reinsurers were to increase their rates [for underwriting risks], it would inevitably result in higher premiums for homeowners."

The latest figures from the ABI on the effects of the June and July 2007 floods reveal that the total cost is estimated to have reached £3bn. With severe weather predicted to become more prevalent, it will become increasingly difficult for insurers to offer comprehensive protection against the resulting damage.

The ABI is hoping to keep home insurance policies competitive by discouraging local authorities from giving planning permission for properties to be built in flood-prone areas. A little-known clause in the statement of principles states that any obligation to continue offering flood cover in high-risk zones would not apply to homes built after 1 January of this year.

Anyone who is considering buying a new-build property now should check whether it sits on a flood plain. If it does, they may struggle to secure home insurance.

How to minimise the damage to your home

Look thoroughly at both your buildings and contents policies and confirm that you are covered for flooding.

Ensure that you know how to turn off your gas, electricity and water supply.

Prepare a flood kit. It should contain copies of your insurance documents, a torch with batteries, a first-aid kit, bottled water, non-perishable food, a wind-up or battery radio, blankets and waterproof clothing.

Where possible, raise electrical sockets and wiring to at least 1.5 metres above ground-floor level.

Fit non-return valves to all your drains and water-inlet pipes. This will prevent surges coming up the system and overflowing out of toilets and drains.

Sandbags may be provided by your local council but you can make your own by filling pillowcases and plastic bags with earth.

Fit watertight doors. Stable-type doors can be used, with the lower half defending the property.

Fit plastic airbrick covers as a temporary measure to prevent flood water coming.

Always check that any flood-protection products meet the British Kitemark standard. You can check this at www.environment-agency.gov.uk