Pressure growing for government-insurance industry deal on cover for flood-hit homes

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Pressure is building on the Government and the insurance industry to reach agreement on a deal whereby insurers guarantee cover for flood-hit homes provided the Government invests in flood defences.

With the existing deal expiring in June 2013, the two parties remain some way from consensus on how to extend the agreement – and failure to agree on time could leave high-risk homes without insurance.

Insurers, understandably wary of covering properties in flood zone areas, currently group homes into categories according to their risk of flooding. For example, those in areas where the chance of flooding is greater than 1 in 75 are in the “significant” category. “Moderate” risk homes are those in areas with a one in 75 chance of flooding or less but greater than one in 200, while those below that level are in areas considered low risk.

The groupings take into account local flood risk management and investment. Homes in the significant risk areas where there’s a history of flooding and insufficient or non-existent flood defences are not guaranteed, with insurers instead working on a case-by-case basis to see how cover can be maintained.

Worryingly for properties in flood-risk areas, home insurance costs have so far been kept underpriced, due to cross-subsidisation. Home insurance for those considered at risk of flood damage is underpriced by a massive 165 per cent on average, according to the Association of British Insurers. If you want a better idea as to whether your area is at risk of flooding, it’s worth taking a look at the Scottish Environmental Protection Agency’s flood risk map ( The agency’s website also has advice for households prone to flooding on how to prepare and protect their property. But it’s worth remembering that the map looks only at flooding from rivers and seas, whereas blocked drains and sewers also cause a significant amount of flood damage.