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The recent flooding in the UK may have lasting effects on homeowners in those areas. It has been reported that house prices may drop up to 80% in value. It is feared that these floods may be a yearly occurrence and therefore desire to live in these areas will reduce. Another reason why house value will drop is because insurance will either vastly increase in price or be impossible to be insured at all. 5 out of the 6 major home insurance companies are refusing requests for new insurance customers in those high risk areas. Insurers are not obliged to insure people in high risk flood areas but insurers do have an agreement will the government that they will cover existing customers. As insurers prepare to folk out £3 billion in damages to the homes involved in the recent floods they are safe now. 250,000 properties have made claims, next time flooding occurs these insured may not be so lucky. To make a claim, insurance customers will have to take photos and videos of the damage to prove that they require assistance. The Insurance companies such as Norwich Union and More Than have sophisticated mapping systems to determine the price of home insurance. This may lower premiums for low risk areas but high risk customers may be refused insurance all together. 200,000 new homes are due to be built by 2010 in these risk areas. Problems will occur when it comes to sell these properties and greater problems for existing buyers who are yet to move into their new home. Buyers will need to get building insurance before mortgages will be agreed. It is evident that more needs to be done to prevent or prepare for another flooding. The government needs to get involved to make these improvements. It has been suggested that a grant be introduced for homes to improve their own flooding defences. This may take a while to come into place. The recent flooding event has caused a major concern for homeowners and renters in these high risk areas. To check insurance risk postcodes, this can be done on the environment agency website.
Staff editor, Insurance Section, July 2007 |
