A flood of good tips on home insurance

Published on Friday 6 November 2009 19:19

INSURANCE costs are set to rise as the floods that hit parts of north and east Scotland last weekend become more commonplace, insurers have warned.

As the clean-up continued in the affected areas and households claimed on their insurance to pay for the damage, new figures indicated the impact of global warming on the cost of flooding cover.

It is estimated that one in six homes in the UK is at risk of flooding, a number expected to grow as global temperatures rise, according to the Association of British Insurers (ABI). In a report this week – The Financial Risks of Climate Change – the trade body estimated that a 4C rise in global temperatures, which could happen by 2060, would cause the annual insured flood bill in Scotland to rise by up to 20 per cent. This figure is the highest in the UK, with the exception of Wales and south-west England.

If these losses materialise, the cost of flood insurance will rise, and for some at risk it could be harder to obtain, the ABI warned.

Nick Starling, director of general insurance and health at the ABI, said: "These findings have serious implications for insurers, householders, businesses and governments. The continued widespread availability of property insurance depends on taking action now to manage the threats of climate change."

Some insurers are looking at how cover can be amended to reflect the heightened risk of flooding without premiums having to rise too sharply. For instance, Co-operative Insurance is considering implementing resilient repairs in claim settlement provisions, looking at how repairs can be carried out in a way that improves a property's ability to withstand future flooding. The repair stipulations would include concrete floors, higher electrical sockets and doors that prevent or delay water entry.

James Hillon, head of home insurance at Co-operative Insurance, said: "While the government has pledged to increase funding in flood defences moving forward, it is up to the insurance industry to lead the way with the here and now as the threat of flood is very real and needs to be tackled."

While the cost of last weekend's floods will remain unclear for some time, a spokesman for the ABI said such floods were among the events insurers expect to face during the year. "It is too early to say what the insured cost may be, but, for insurers, it is not a major event and it's one that they will all be geared up to dealing with."

But what can homeowners do to ensure they are covered in the event of future floods? Julie Owens, head of home insurance at moneysupermarket.com, said last weekend's floods highlighted the need for homeowners living in flood risk areas to make sure they have the right insurance cover in place.

If you live in a property with any risk of flooding, it is wise to get buildings and contents insurance. As the latter does not cover the structure of the property and buildings insurance does not cover the contents, having both offers comprehensive protection.

If you have one at present, your insurer may offer a discount if you use them for the other. Similarly, you may get a discount buying the two together if you have neither.

"People living in at-risk areas should check the details of what their buildings and contents policies cover, as well as the limits and excesses on both," said Owens. "It pays to make sure that the quality of your insurance is high and you won't be left out of pocket if you have to claim."

Insurers have significantly improved the way in which they handle flood cases, particularly where homeowners have made previous claims. The vast majority would still provide cover for a customer if they had made a flood claim at a previous address, said Owens.

"If a customer has made a flood claim at their current address and needs insurance, the typical advice is still to remain with the current insurer."

However, insurers expect homeowner in at-risk areas to make attempts to minimise their claim. For example, those at risk should take expensive portable items upstairs or somewhere else dry. Similarly, tell your insurer of any specific flood defences you have put in place, as a lower premium may be offered if it considers your property a lower risk than others in your area.

&#149 See box for more advice on making sure you are covered in the event of flooding. To find out whether your property is at risk of flooding, check the Scottish Environment Protection Agency's flood map – www.sepa.org.uk/ flooding/flood_map.aspx.