Flood Re – Good News For Flood Risk Homes

March 20, 2016

On 27th June 2013, the Association of British Insurers (ABI) and the Government agreed a model for the new ‘Flood Re’ scheme to ensure that flood insurance remains available and affordable for as many people as possible.

It has been agreed to develop a not-for-profit flood fund, Flood Re, which will offer flood insurance at a set price to those who are at high flood risk and who might otherwise struggle to obtain flood insurance. Flood Re is due to be introduced for residential properties in the summer of 2015 and is expected to last for 20 years. The current scheme will continue up until the introduction of Flood Re.

What does Flood Re mean?

  • Under Flood Re the cost of flood risk insurance will be linked to a home’s Council Tax band. However, homes in the highest Council Tax band (H) will not be covered by the scheme.
  • To fund Flood Re, every insured household in the country will effectively pay a levy of £10.50 a year.
  • There will be a further charge that will be applied
  • to homes that are considered to have a high risk of flooding.
  • If a property has a risk of flooding which is less than a 1-in-200 year occurrence, cover will be available but any home with a higher risk could either be uninsurable or be subject to a high premium.
  • There is no indication that insurance excesses will be capped.

Overall, the new scheme is good news for homeowners. The availability of affordable flood insurance benefits a lot of homeowners. New research shows that more homes are potentially at flood risk, from flash flooding for example, and not just those living nearby to rivers or the sea. Property insurance which covers flooding is often essential to getting a mortgage so if flood insurance is more difficult to obtain, then this can severely impact the property market.

If you are concerned about flooding when buying a property, BHW Solicitors advise that a Flood Risk search is carried out, providing you with information on the flood risk and insurability of the property.

For more information on Flood Re, please see here and here.

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