Flood Re for Dummies

A Plain English Guide to the Flood Re Scheme

A Guide to the Flood Re Scheme

Flood Re is the first scheme of its kind in the world, it's a not-for-profit scheme backed by the government and owned and managed by the insurance industry.
Flood Re makes no difference to how you purchase your home insurance, you'll continue to buy and deal with your own insurer as you do now.
The Flood Re scheme operates in the background to provide you with peace of mind; the simplest way to explain how Flood Re works is that it is an insurance policy for your insurer (it's what we in the insurance industry call a re-insurance scheme). So, if your house floods and you make a flood insurance claim, your insurer will be able to claim back the money that they pay you from Flood Re. Even if you make a claim, you'll never need to contact Flood Re.
Who's eligible for the Flood Re scheme?

The Flood Re scheme isn't available to all homeowners, to be eligible your property must be:

  1. The property is currently covered by an insurance contract which is held in the name of, (or on trust for) one or more individuals or by the personal representative of an individual.
  2. The policy holder, or their immediate family, must live in the property for some or all of the time (this can be with other people) or the property must be unoccupied.
  3. The property must have a domestic Council Tax Band A to H (or equivalent).
  4. The property must be used for private, residential purposes.
  5. The property must be a single residential unit or a building comprising of two or three residential units.
  6. The property must be insured on an individual basis or have an individual premium, it cannot be part of a policy which includes a number of other properties as well.
  7. The property must be built before 1st January 2009 (if a home is built before 1stJanuary 2009 but then demolished and rebuilt, the new home will however still be eligible).
  8. The property must be located within the UK specifically being: England, Wales, Scotland and Northern Ireland (excluding the Isle of Man and the Channel Islands)
There are some exceptions to the types of property that can be included which we have listed below (A-I). These properties must also meet all of the 8 criteria to be eligible. The property types are:
  1. Bed and breakfasts paying Council Tax and insured under a home insurance contract.
  2. Farmhouses dwellings and cottages. Where farmhouse dwellings are included in as part of a commercial lines insurance policy, as long as the insurer can split out the dwelling element (and that this meets the criteria 1-8 (inclusive) above), the dwelling part of the risk can be ceded to Flood Re.
  3. Holiday homes/Second Homes.
  4. Properties occupied by home workers.
  5. Individual leaseholders protecting their own property/flat.
  6. Leasehold blocks if they contain 3 units or fewer and the freeholder(s) lives in one of the units to be insured.
  7. Single unit leasehold properties where the leaseholder insures the structure of the property.
  8. Residential "buy to let" properties.
  9. Static Caravans/homes if in personal ownership
If your home is included in A-I above, then you are only eligible to for buildings only cover or a combined insurance policy (covering both the building and its contents) you will not be able to buy cover for just the contents of the building.
Flood Re will also cover a tenant's or individual person's contents in a rented or leasehold property even if the buildings risk would not be eligible (for example large blocks of flats) as long as the policy and the property it relates to meet the acceptance criteria 1-8 listed above
Is my insurer a member of the Flood Re scheme?

Insurers don't automatically have to be a part of the Flood Re scheme, however many of them are. There's not a publically available list of all insurers that do subscribe to Flood Re however, a list of some of the insurers participating in the scheme can be found on the Flood Re website.

If my insurer is a member of the Flood Re Scheme will my policy automatically be included in the scheme?

No, if an insurer is part of the Flood Re scheme it doesn't necessarily mean that the they will include your property in the Flood Re scheme.

How will my insurer decide whether or not to include my property in the Flood Re scheme?

This will be based on their view of how likely your home is to flood. The more likely they think your home is to flood the more likely they are to include you in the Flood Re scheme. Insurers are likely to have different views on this.

I've previously made a flood insurance claim – will I still be eligible for the Flood Re scheme?

Yes, you will as long as your property meets the eligibility criteria.

My insurance policy is due for renewal, will I be included in Flood Re?

This depends on whether you meet the eligibility criteria, whether your insurer is part of the Flood Re scheme and whether or not they decide to pass on the flood risk to Flood Re.

How much will flood insurance cover cost under Flood Re?

The Flood Re scheme is paid for in two ways:

  1. A tax/levy paid by all home insurers in the UK.
All insurers pay an amount of money in to the Flood Re fund based on what proportion of homes in the UK they insurer – the larger their share the more levy they pay. Insurers pass the cost of this levy back on to all policy holders whether or not they are high flood risk. Policyholders are generally unaware that they are contributing towards the levy as it's automatically included in the overall cost of your household insurance policy. The initial levy has been set at £180M.
  1. An amount paid by all policyholders who's properties are included in the Flood Re scheme.
If your home is included in the Flood Re scheme you will pay a fixed premium for the flood part of your insurance policy. What you pay will vary by the type of cover you buy and by the Council Tax band that you live in.
The current charges for policyholders are:
Flood Re premiums
How can I find out what council tax band my property is in?

You can find out your council tax band at: http://cti.voa.gov.uk/cti/InitS.asp?lcn=0

How much will my insurance cover cost if my insurer does not include me in the Flood Re Scheme?

If your insurer decides not to include you in the Flood Re scheme they will set their own charge for offering you flood cover and include this within the overall cost for all other cover such as theft, fire etc. If your insurer doesn't include your property in the Flood Re scheme. It is unlikely that if you are eligible for Flood Re and your insurer chooses not to include you in it that your flood insurance premium will cost you less that if it your home was included in the Flood Re scheme.

How much will cover for risk other than flood e.g. fire or theft cost?

The premium charged by your insurer for all other insurance cover other than flood will be set by your insurer in exactly the same way as it is now, the cost of this cover will be added to the cost of your Flood Re premium.

How much money can the Flood Re scheme save me?

Research published by Flood Re has highlighted that on average households are able to save around 50% in comparison to their premiums prior to the schemes introduction. Some properties in very high flood risk areas or that have had several flood claims may have been virtually uninsurable before the launch of Flood Re, in fact many people chose to 'self-insure' i.e. pay for the cost of damage caused by a flood themselves.

Will the costs under the Flood Re scheme change?

Yes, they will but not in the short term. Flood Re has set the current levies for a 5-year period (until 2020) after which time the levies will be reviewed and adjusted according to the cost of running and maintaining the scheme. It's important to remember that Flood Re is a non-profit making scheme and the levies will always be set to minimise the cost to homeowners.

What excess will I have to pay if I make a flood insurance claim?

If your home is covered under the Flood Re scheme and you make a flood claim, you will also benefit from a low flood excess. The current Flood Re excess is £250 which is significantly lower than many of the policy excesses faced by household prior to the schemes launch.

If your insurer doesn't cede you in the Flood Re scheme your flood insurance excess will vary, ask your insurer or broker to confirm this amount to you, it should also be stated in your policy documentation.

What excess will I have to pay for non-flood claims?

The excess you pay for any other type of insurance claim you make under your policy will be the standard amount that your insurer would typically charge.

How do I make a flood insurance claim under Flood Re?

If you need to make a flood insurance claim you'll do this in exactly the same way as you would do for any other type of claim. Flood Re won't actually get involved in the handling or payment of your claim directly, this will all be done by your insurer. Once your insurer has settled your claim they will look to re-coup these costs from Flood Re.

If you've got a question that we've not answered contact us at on info@floodassist.co.uk and we'll be happy to help answer it for you!