The government and the ABI have struck a deal to ensure that most of us will be able to buy home insurance, even if our homes are at ‘significant risk’ of flooding. All well and good, but what's the catch?
I live in Gloucestershire, which last year suffered the worst flooding on record following days of torrential rain. Thousands of homes and businesses were flooded and it became almost impossible to get around because so many roads were under water.
Despite the fact that my home is right on the bank of a small river, it was not affected, but the whole episode was a bit of a wake up call, and prompted plenty of questions. Could we be less fortunate next time? How will this flooding affect our flood risk rating and will I be able to get insurance?
Well, I got some of the answers I was looking for a couple of months ago when I came to renew my home insurance. First of all, although loads of insurers simply did not cover my area, I did end up getting a better deal than I had already, so that was reassuring. But I wanted to know why so many had refused to offer cover, and I got my answer when I stumbled upon the Environment Agency’s Flood Map.
The map quite clearly showed a dirty great big blue flood risk symbol right over the top of my house, and stretching to several streets around. “That wasn’t there when I bought the house five years ago, it would have come up in the searches”, I thought. So obviously my flood risk has been upgraded following last year’s floods. Given that the immediate area never really looked like flooding, I found that a little irritating.
Had the Environment Agency just upgraded flood risks en masse across the region, or had it made an effort to look at risks on an individual and historical basis? I don’t know, but the fact is that my house has not flooded in the hundred odd years since it was built, and did not flood last year, so why is it listed as a ‘significant flood risk’? The point is that this deal with the government is based on the level of flood risk facing a property, so the data in the map had better be accurate.
If you look at the government’s deal in more detail, it’s easy to see why accuracy is important. In essence, the insurers will continue to offer flood insurance as standard to anyone whose home faces a flood risk of less than 1 in 75 (in other words, it will flood less than once in 75 years).
They will also cover any home with a significant risk (1 in 75), provided the government commits to improving flood defences in those areas. But the fact is that the government is already committed to spending some £2bn on flood defences between now and the end of 2011, so is it going to commit more funds as part of this deal? No word on that yet - there is talk of a ’25 year strategy', but it’s all rather light on details at the moment.
Of course, we shouldn’t complain about the government using taxpayers’ money to protect our homes from flooding – after all, around two million homes are classified as ‘at risk’ in one way or another. But presumably we will be hit with higher premiums too, so that the insurers can cover their risks and protect their profits – so we get to pay for it twice over, whilst the government continues to allow new homes to be build on flood plans (three million more by 2020).
All that aside, this deal is clearly good news for the half a million home owners whom the insurers might previously have simply refused to cover, but what about those home that face a risk greater than 1 in 75?
The message to those homeowners appears to be 'tough luck, you’re on your own.' The government won’t even go so far as to say how many there are (I wonder why voters). Environment minister, Phil Woolas, when asked to estimate how many homes may fall outside the one-in-75 risk bracket and be classed as undefendable against floods, said: "That is not for government to declare."
My problem with all of this is it is based on risk assessments that have been developed through mathematical modelling. What if the models are wrong, or inaccurate? Do they take account of local (and by local I do mean my house, yes) historical data or existing measures that adequately deal with flood risks? Judging by the discrepancy between my flood risk and the facts, I would say not (or at least not all the time). Despite that, and even though the effect on people’s lives and homes are potentially devastating, the whole set up seems to rely on these models entirely.
So what can you do? Well the first thing you should do is look at the Flood Map and find out about your risk rating. If you disagree with the rating you have been given, you can challenge it, first of all by contacting your local Environment Agency office.
Beyond that, there is very little you can do, short of preparing for the worst (all you people with risk of more than 1 in 75 take note). Some of the advice given out by the Environment Agency is practical and useful, some less so. Unless you have already been flooded, I doubt you will be too keen to convert your home into a semi-submarine house, by installing plastic doors and windows, moving sockets halfway up the wall, moving the boiler to the first floor…
