Insurers and government strike flooding deal

Homeowners in flood-risk properties have been given a boost after a deal was struck to guarantee the availability of affordable insurance. The government and the insurance industry have finally reached agreement on Flood Re, a scheme aimed at keeping premiums affordable for properties hit by flooding.

People whose homes are at risk relieved that agreement has been reached over insurance. Picture: Greg Macvean

It replaces a previous arrangement in which insurers guaranteed affordable cover for flood-risk homes in return for government investment in flood defences.

Flood re, expected to be in effect by the middle of next year, will ensure that around 350,000 properties considered at risk of flooding will be protected from large premium increases.

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The new deal features a cap on flood insurance premiums and links them to council tax bands, meaning homeowners will know the maximum they will have to pay. The cap will be paid for by a levy of £10.50 on all home insurance premiums.

The parties had been struggling to agree on the types of properties covered by the scheme and the cash the government would commit to spending on flood defences.

One in 22 homes in Scotland is at risk of flooding, according to the Scottish Environmental Protection Agency (Sepa), while insurers estimate that without an insurance protection scheme around 5,000 homes in Scotland would struggle to afford home insurance.