Flooding jolts home insurance boom

Thousands of homeowners in some of the UK’s worst-affected flood areas are applying for home insurance for the first time in the wake of last month’s catastrophic downpours.

Applications from residents in Hull, Sheffield, Doncaster, parts of Scotland and the West Midlands leapt by up to 300 per cent on the moneysupermarket.com price comparison website in the days immediately after the deluge that devastated so many homes and workplaces.

Richard Mason, director of insurance at moneysupermarket.com, said: “The number of people applying from some of the postal districts affected by the heavy rains has been truly astonishing.

“Clearly, homeowners who narrowly escaped the floods this time have realised that without any insurance cover they could be left footing bills for tens of thousands of pounds in the future."

The surge in applications comes amid reports that insurers are considering the possibility of blacklisting up to one million homes built on flood plains.

The insurers want access to a database held by the Environment Agency, which they say has details of all flood defences, when they were built and what condition they are in.

According to the Environment Agency, about 2.3 million homes are built on flood plains. With 40 per cent of property owners in the UK electing not to have home insurance, there may well be over 900,000 homes on flood plains without cover at the moment.

Richard Mason added: “For now, insurers say they will still abide by the terms of a deal they reached with the government in 2002. This states that insurers will continue to offer cover for those already insured and take on new business where defences are in place or planned.

“At present, the evidence suggests premiums have not yet risen in the aftermath of the floods. In an attempt to maintain market share, insurers may well absorb much of the claim costs from reserves. However, if the government ever reneges on its part of the deal to build more flood defences, then cover may either be withdrawn or premiums spiral to as much as ten times current costs.

“I would strongly urge any homeowners whose properties are on flood plains to buy good-quality home insurance immediately.

“Doing so ensures they will continue to be covered regardless of what happens in the future. Perhaps more importantly, it means that in these uncertain times, when the danger of more flooding continues, they will not be left to shoulder at the cost of damage if it happens to them the next time around.”