Since its introduction, April 2016, Flood Re has helped over 100,000 households obtain insurance. Flood Re is the first scheme of its kind in the world and is designed to provide affordable insurance for people owning or living in properties that are at a high risk of flooding.
If I live in a high flood risk area can my home be insured under the Flood Re scheme?
There are 2 things that will determine whether your home is included in the Flood Re scheme:
Your home must meet certain eligibility criteria, for example it must be built prior to 2009, it must be lived in by you and or your family and it must have a domestic Council Tax Band A to H (or equivalent). A full list of the criteria can be found on the Flood Re website.
If your home meets the eligibility criteria the decision on whether you will be included in the Flood Re scheme will be down to your insurer.
How will my insurer decide whether or not to include me in the Flood Re scheme?
Simplistically, this will be based on their view on the likelihood of your home flooding. The higher the likelihood, the more likely they are to include you in the Flood Re scheme. If your insurer does include your home in the Flood Re scheme (in insurance speak this is called ceding) and your home floods, they will be able to claim back the cost of the flood insurance claim from Flood Re.
If they decide not to include you in the Flood Re scheme they will set the price that they want to charge you for flood and include this with all the cost for all other cover such as theft, fire etc. The likelihood is here is that the cost of the flood insurance element of your policy will be cheaper than the Flood Re levy.
How much does Flood Re cost?
The Flood Re scheme is paid for in two ways: There’s a levy (a tax) that all home insurers in the UK contribute towards. Insurers will pass this cost on to everyone that purchases a home insurance policy (not just those at a high risk of flood). Most people are unaware that they are contributing towards the levy as it’s automatically included in the overall cost of your household insurance policy. If your home is insured under the Flood Re scheme you will pay a fixed premium for your flood insurance cover. This varies with the type of cover you require and the Council Tax band that you live in. The current charges are set at:
Council Tax Band
Combined (buildings and contents) policy
Statistics published by Flood Re this week highlighted that on average households are able to save around 50% in comparison to their premiums prior to the schemes introduction.
What about cover for things other than flood for example a fire or a burglary how much will that l that part of my insurance premium cost?
The premium charged by your insurer for all other insurance cover we be set by your insurer 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?
The premium savings for households insured under the Flood Re scheme can be substantial. Some properties in very high flood risk areas or that have had several flood claims may have been virtually uninsurable until Flood Re’s launch. The cost of insuring these homes would have been several thousands of pounds.
Prior to Flood Re many people chose to ‘self-insure’ i.e. not pay for insurance but to foot the bill for any damage caused by a flood themselves. Flood Re also offers these homeowners an affordable lifeline.
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 far lower than any of the policy excesses faced by household prior to the schemes launch. These excesses too could run in to thousands or tens of thousands of pounds. 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. 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.
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 be set to minimise the cost to homeowners.
Whilst Flood Re isn’t accessible to everyone the team here at Flood Assist believe that the scheme is a significant move forwards in the providing affordable insurance for the thousands of people that live and own homes in high flood risk areas.