As many unhappy home and business owners in Leeds, York, Calderdale and other parts of the North will testify after the events of December and January, flooding is one of the most traumatic of experiences. So called “One in a 100+ year” floods are now occurring on an increasingly regular basis. Debate will rage as to whether this is natural or man-made, but those affected are less concerned about the causes and more about land values, the saleability of their properties and the ability to obtain insurance against the risk of flooding.
Limited help is at hand on this last point courtesy of the establishment by the Government, in conjunction with the Association of British Insurers, of a flood reinsurance scheme (Flood RE) designed to enable the availability of affordable insurance against flood risk for homeowners whose properties are at high risk of flooding. The scheme will be in place by April 2016.
Flood Re is a not for profit reinsurance fund, intended to last 25 years, which will give insurance companies the ability to purchase subsidised reinsurance against flood risk which they are unwilling or unable to cover themselves. It will offer capped premiums and an initial maximum excess of £250. The scheme will cover an estimated 350,000 properties and be funded through a small levy on all household premiums across the country.
I say “limited” help because, importantly, Flood Re is not available for many types of properties including all commercial property, residential property built since 2009, mixed use property, buy-to-let properties where the landlord arranges building insurance, purpose built blocks of flats and houses that have been converted to flats.
Flooding is not an issue which is going to go away and anyone wanting to buy or let properties should always consider: (1) Location – ideally, don’t buy or let a property in a potential risk area. Your solicitor should undertake the appropriate searches to establish whether the property is at risk. If it is a new property, seek assurances from the builder about the measures which have been taken to counter the likelihood of flooding in the future; and (2) Insurance – if the property is at risk, talk to your insurance broker. For those properties which qualify, will Flood Re be available and/or is flood insurance going to be available at acceptable rates?
Written by Richard Wheeldon of Berwins Solicitors.