- It is one of the most significant innovations to be introduced to the home insurance market.
- It is designed to enable affordable flood cover for those at the highest risk of flooding.
- It will create a level playing field for competing insurance providers in the UK market and offer customers greater choice of providers.
- It comes into effect in April 2016.
- It is planned to be in place for 25 years.
- Not all insurance providers are taking part in the scheme.
Flooding and extreme weather across the UK has become a familiar sight in recent years, as many homeowners will sadly know all too well. Whilst meteorologists have predicted that these sorts of weather events are likely to increase or indeed become the norm, the big question is...what are we going to do about it?
The UK Government has pledged to spend millions of pounds in flood defences across the UK but there is also a new scheme designed to help property owners living in the worst affected areas to source affordable home insurance. It’s called Flood Re.
What is Flood Re?
Although insurance has been available to homeowners living in areas at high risk of flooding, the increased risk has been reflected in the premium meaning that, for some, home insurance has not always been affordable.
Flood Re is an insurance industry initiative, backed by the Government, to develop affordable flood insurance. Due to launch in April 2016, the scheme offers insurance companies the opportunity to offer flood cover to owners of buildings at a higher risk of flooding, with the insurance cost being capped by the property’s council tax band. The scheme is also aimed to improve the public’s understanding of the different levels of flood risk.
Setting up Flood Re
The insurance industry is paying £10m in set up costs to put Flood Re into effect. Thereafter there will be two sources of income: the flood part of the premium for policies which are underwritten by Flood Re (a portion of what you pay towards your home insurance policy), and an additional annual levy of £180 million from the insurance industry.
Does my home qualify?
Only certain types of properties are eligible to be covered by Flood Re. To benefit from Flood Re your property must:
- Have been built before 1st January 2009.
- Be located in England, Scotland, Wales or Northern Ireland.
- Be used for residential purposes and occupied by the policyholder or their immediate family.
- Have a council tax band A-H.
Holiday homes, second homes, bed and breakfasts paying council tax, properties used for home working and tenanted properties with contents insurance are all eligible for cover.
Read the eligibility page on the Flood Re website for more details: http://www.floodre.co.uk/eligibility
Buying home insurance
Homeowners should shop around and purchase home insurance as normal. For insurance providers participating in Flood Re, such as HomeProtect, the cost that you will be charged for flood risk is capped based on your property’s council tax band, and will be factored into the quote you receive.
Flood is just one element that makes up your overall home insurance premium. You may opt to cover other perils such as fire, theft or even accidental damage depending on your circumstances which will all be included into your premium. HomeProtect can cover a very wide range of personal situations and unusual property types.
Making a flood claim
There is no change in the claims handling process for properties insured through Flood Re. Your insurance company will still arrange and manage the claim as they would normally. Then, once all restoration work has been completed, Flood Re will refund the value of valid claims to your insurance company.