Building Insurance - Flood Risk
During the course of a conveyancing transaction we are often asked by clients about obtaining quotations for buildings insurance with particular reference to the risk of flooding.
During the conveyancing purchase process we routinely undertake environmental searches which give details about a properties potential risk of flooding. Flooding can affect many properties not just those located by water courses. In recent years there has been widespread coverage of flooding in all areas of the country. Subsequent reports follow regarding properties at risk of flooding being unable to obtain buildings insurance.
The insurance industry has created a solution to the potential problem of properties being unable to obtain insurance due to them being located in a flood risk area. They have created a ‘not for profit’ flood insurance fund which will be known as “Flood Re”. The Flood Re scheme is due to be up and running by summer 2015 and is a fund which will be used to assist with insurance claims. The flood element premium of all home insurance policies will be placed into Flood Re and will be priced accordingly based on the Council Tax band of the property. Insurance companies will then use the facility to assist the highest risk homes (1% to 2% of houses) in obtaining buildings insurance cover. This will apply to an estimated 350,000 homes that would have been unable to find affordable cover in a normal market. If the high risk properties do flood, then Flood Re will reimburse the insurer for the costs of the claim.
The set up costs for Flood Re are estimated to be 10 million pounds and are being paid by the insurance industry. The income for Flood Re itself will be from insurance policies and an additional levy on the industry.
At Clarkson Hirst we can advise you on such issues when purchasing a property and if you would like a `no obligation quotation’ then please log onto our online calculator or alternatively call our Lancaster office on 01524 39760.
Clarkson Hirst have offices in Lancaster, Kendal and Barrow.