The Association of British Insurers (ABI) says that the average cost of flood damage to homes is between £20,000 and £40,000. The level of insurance claims from the latest floods that have hit Cumbria, west Wales and Dumfries and Galloway could exceed £100m.
“Events like flooding highlight why insurance is so important,” says Nick Starling, the ABI’s director of general insurance and health.
Under a deal struck between the government and the insurance industry in 2005, insurers agreed to continue to insure homes at risk of flood. However, you may find it hard to switch insurance provider. The cost of the cover will also reflect the risk, so expect it to be more expensive than in an area relatively free of flood threats. As part of the agreement the government said it would increase its spending on flood defences. For businesses, there is free advice available from bodies such as Business Link in England. The Federation of Small Businesses is offering interest-free loans of up to £5,000 to help small firms across the UK cover costs associated with keeping their business trading and with repair of their premises after flooding.
What is the long-term picture?
The 2007 floods across large parts of Yorkshire, the Midlands and the West of England cost insurers just over £3bn. They were on a much wider scale than the latest incident, but the insurance industry is gearing up for more and more claims in the future. Earlier this month the ABI said the cost of flood insurance and windstorm damage would rise for insurers as global temperatures increased. This would lead to higher premiums for consumers and a restriction of cover as insurers would need more reserves. Based on a 4C rise, the average annual insured losses from river flooding and flash floods in the UK could rise by 14% to £633m by 2060. Windstorm losses could rise by 25% to £827m each year. However, in the south-west of England, flood damage losses could increase by 29%.
“The first priority for insurers will be to ensure that every claim is dealt with as quickly as possible and they will do everything they can to help customers recover.”
Source BBC
“The first priority for insurers will be to ensure that every claim is dealt with as quickly as possible and they will do everything they can to help customers recover.”
Tags: flood insurance