What is Flood Re?
Flood Re is a reinsurance scheme which will allow insurance companies to offer more affordable flood cover to those living in high risk areas.
You’ll learn about:
- Flood Re objectives and how the scheme works.
- Which properties can and can’t be covered by Flood Re.
- How to buy flood risk insurance through Flood Re.
- How to create a flood survival kit.
- Which emergency services are on hand.
- Safety when cleaning up after a flood.
- How to make an insurance claim.
Ready to put a stop to costly flood risk premiums? Get started with The UK Guide to Flood Re today.
A total washout
In recent years the UK has experienced severe winter storms, resulting in extensive coastal damage and widespread flooding.
The insurance industry has paid out billions of pounds as thousands of homes have been destroyed by these flood waters. As a result, many residents have since struggled to find affordable home insurance due to being in a high flood risk area.
A new insurance initiative, backed by the Government, was launched in April 2016 that's designed to help property owners at risk of flooding find affordable home insurance. It’s called Flood Re.
Flood Re key facts
- It is open to properties within council tax bands A-H.
- It came 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.
- 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.
- Not all properties are eligible for cover.
HomeProtect will work out eligibility when you get a quote, and offer you the best possible level of cover.
What is Flood Re?
While home insurance has been available to residents living in areas at high risk of flooding, it has not always been affordable.
The risk of flooding is reflected in the price, so in some cases home insurance premiums or excesses have increased. As you would expect, homeowners are not happy about these changes.
In the worst case scenario, residents might have to choose between paying a large sum and not having cover at all.
As a result, the Government and Association of British Insurers (ABI) have worked together to create Flood Re.
"Flood Re is a reinsurance scheme which will give insurance companies the chance to offer affordable flood cover in high risk areas. Although it remains up to each individual insurer to set their own price for flood cover, the reinsurance cost charged by Flood Re is capped by the property’s council tax band.
This will give people access to more affordable flood insurance ensuring that the insurance safety net continues to be in place for the future, even if your property is at a high risk of flooding." - Brendan McCafferty, CEO, Flood Re
Flood Re objectives
To provide home insurance cover in areas at high risk of flooding.
To raise awareness of preventative measures, the different levels of flood risk and what to do in a flood.
How does Flood Re work?
What do ‘Cede’ and ‘Reinsure’ mean?
Definition of cede: Give up (power or territory)
Synonyms: surrender, concede, relinquish, yield, part with
Definition of reinsure: To transfer (all or part of a risk) to another insurer to provide protection against the risk of the first insurance
To cede a policy to a reinsurance scheme:
Insurance is a strongly regulated industry. Insurers are required to maintain enough capital as collateral against losses.
Reinsurance allows the insurer to transfer the risk to an external organisation. For example, HomeProtect can reduce its exposure to risk and provide cover to more properties by passing the flood risk on to Flood Re.
HomeProtect is working in partnership with Flood Re
We’re always looking for ways of providing better quality, affordable products for our customers, so we’re investing heavily to ensure that we are able to start ceding policies to Flood Re. - Alex Parker-Walklate, Head of Product, HomeProtect
How is it funded?
It is estimated that 350,000 homes could benefit from the launch of Flood Re over time.
To put the Flood Re scheme into effect, the insurance industry invested £20 million in set up costs.
Now that it's up and running, Flood Re has two sources of income:
The flood part of the premium for policies which are transferred to Flood Re.
An additional annual levy of £180 million from the insurance industry.
Prices will vary
The flood element of your premium will be capped based on Council Tax band, so prices will vary according to property type.
Your insurer then adds on other risks, such as fire and theft, to calculate your final price. Your overall premium is dependent on your individual circumstances.
HomeProtect takes all of these details into account, and returns a quote which will automatically calculate your eligibility for Flood Re cover.
HomeProtect is available 24/7
HomeProtect is available online 24/7 and can quote in 98% of cases.
Who will be eligible for the scheme?
So that Flood Re is available for everyone who needs it, properties will only be eligible if they meet all of the following criteria:
- The property must have a Council Tax band A to H (or equivalent).
- The property must be built before 1st January 2009 (if a building is demolished, and rebuilt before this date, the new property is still eligible).
- The insurance contract must be held in the name of one or more individuals.
- The property must be used for residential purposes.
- The property must have an individual premium.
- The policy holder or their immediate family must live in the dwelling for some or all of the time, or the dwelling must be unoccupied.
- Leasehold flats with 3 or less units.
- The property must be located within the UK mainland.
So who can’t be ceded to the scheme?
- Bed and breakfast premises paying business rates.
- Blocks of residential flats (Contents cover only).
- Company houses/flats (Contents cover only).
- Contingent buildings policies (e.g. held by banks).
- Farm outbuildings.
- Freeholders/leaseholders deriving commercial income insuring blocks/large numbers of properties in a portfolio.
- Housing association’s residential properties.
- Multi-use under commercial or private ownership.
- Residential ‘buy to let’ (which does not meet the criteria specified earlier).
- Social housing properties (Contents cover only).
- Static caravan site owners (for commercial gain).
How do I buy home insurance now?
Essentially, nothing has changed. You don’t need to do anything differently when shopping around for insurance. You will be required to provide personal details about your current home and circumstances, as always.
Use of the Flood Re scheme happens in the background and you will never need to deal with Flood Re directly.
If you come direct to HomeProtect then we will work out your eligibility for Flood Re automatically, and will return a quote based on your individual circumstances.
Making a claim
Call your insurer as soon as possible after a flood. It’s likely that they will need to make arrangements for a loss adjuster to come to your home.
A loss adjuster will survey the property and confirm any repairs or replacements that are needed and that are covered by your policy.
You should never throw non-perishable items away until you have received clearance from your insurance provider because doing so can adversely affect your flood insurance claim.
Ask your insurer
First things first, check your policy documents...
Check your policy to find out which level of cover you have in place. If you are not sure, then you should ask your insurer several questions when making a claim.
Common questions to ask:
- Am I covered for alternative accommodation?
- How long will it be before a loss adjuster can visit?
- Can emergency repairs and water-pumping start without an adjuster's approval?
- Can I make flood defence modifications at the same time as repairs to reduce damage from flooding in the future?
- Will my contents be replaced as ‘new for old’?
- Will I be reimbursed for food that has been spoilt?
- Can you provide or recommend a professional cleaning company?
- Check your policy schedule – you will have received this in your welcome email or updated renewal documents.
- Check your excess – for instance, you might decide not to claim if your excess is more than the damaged items are worth.
- Gather your receipts or invoices which prove the value of any items that you're claiming for.
- Check which items are not covered, as outlined in your policy documents.
- Create an inventory of the damaged items and their estimated value.
- Provide a description of the extent of the damage, and photos where possible.
- When you’re ready to call, have your policy number to hand.
Who pays the claim?
Your claim will be handled by your individual insurer as usual. So although you may be reinsured through Flood Re, you should still contact your insurer directly to start the claims process.
Behind the scenes, Flood Re will interact with each insurer who has chosen to pass flood risk into the scheme. Then, the insurers will be reimbursed for any valid claims.
On verification of a successful claim, your insurer will arrange an agreed amount for the property to be restored. Now you can start rebuilding your life with the support you need.
Free PDF download: The UK Guide to Flood ReDownload your copy
I bought my new house and was misinformed about if the property had been flooded. I found out it had and was extremely worried about the cost [of insurance cover]. After completing the questionnaire I was surprised how reasonable the cost was. Also the level of cover compared to other insurance companies is extremely competitive. It's never something I look forward to doing but was quick and easy and finished in minutes. Review Centre, 30 April 2017
Living in a flood plain and having previously made a claim for subsidence I wasn't hopeful that we would get a competitive quote - how wrong I was. We now have a comprehensive insurance which includes contents cover for less than we previously paid for buildings cover. Great insurance with a lot of help from the staff to get the best cover. Thank you. Review Centre, 21 June 2017
This was one of the best offers I could find for insurers willing to protect my property within 200m of a water course. This is because they are part of the Flood:Re scheme which offers affordable premiums to properties more liable to flooding. Review Centre, 7 August 2017