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Changes to flood insurance – what do I need to know?

Insurers are no longer legally obliged to provide flood cover to UK homeowners. The Government and insurers have agreed a new scheme but it may not be in place until 2015 – so what happens until then?

August 5, 2013

What is the new scheme? Flood Re, a not-for-profit scheme which it will allow insurance companies to pool their resources and offer flood insurance without driving up premiums.

What will it mean? The insurer will calculate the cost of flood cover for each property. If it’s more than the amount set by the government, the part of the insurance the homeowner pays to cover their home for flooding will be capped.

Up to 500,000 homes could be eligible, depending on the property’s council tax band.

Who foots the bill? It will cost insurers £180m a year, which translates as approximately £10 out of what each UK homeowner already pays for home insurance.

Is everyone eligible? No, homes in the highest council tax band, band H, won’t benefit from the scheme. And, to discourage development in areas that are likely to flood, homes built after 2008 won’t qualify.

How long will it take? The government hopes the scheme will be in place by summer 2015.

What’s the hold up? The longest part of the process will be asking for EU approval – this could be difficult if Brussels suspects that the scheme will distort competition in the EU insurance market.

What happens in the mean time? Insurers will voluntarily continue under the old rules (which expired in 2015) until the new scheme comes into place.

How should I insure my home?

Can I get a discount on my council tax?

Changes to flood insurance could change how much you pay

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