On 30 June 2013, the ‘Statement of Principles’ agreement between the Government and the insurance industry, comes to an end. The current agreement states that insurers are obliged to provide insurance for ‘at risk’ homes.
This could make obtaining affordable flood insurance extremely difficult, if not impossible for some customers, and for those who cannot get insurance they risk breaching the terms of their mortgage, as well as negatively impacting on the valuation of the property, potential mortgageability and future saleability.
With one in four homes ‘at risk’ of flooding, the ‘Know Your Flood Risk’ campaign is urging Lenders to develop a flood risk strategy that responds to the changes so homeowners are fully aware of their obligations regarding flood insurance.
Chair of the ‘Know Your Flood Risk’ campaign James Sherwood-Rogers said:
“Whilst the impact that the ending of the Statement of Principles will have on flood insurance is unknown, early indications are not good. Some insurers are already trying to rid themselves of insuring previously flooded or ‘at risk’ homes, long before June 2013.
I have learned of several homeowners who are struggling to find affordable insurance; the cost of their insurance has increased by two thirds and the excess amounts are around £15,000 to £20,000.
It is vital, therefore, that mortgage lenders urgently review the impact this policy change is likely to have, and create a centralised strategy that offers guidance and support to existing homeowners that may be affected by the changes.
Homeowners also need to investigate their flood risk and take steps to minimise their own personal risk and protect their home. By understanding their risk up front, they can look at putting in place flood resilience or resistant measures that could reduce their exposure, and therefore make affordable insurance potentially easier to source.”
Practical advice to homeowners has now been issued in the ‘Homeowners Guide to Flood Resilience’ which offers practical advice on how homeowners can prevent and protect their home from flooding. Will you point your client’s in the right direction?
Today’s Conveyancer, bringing you the latest conveyancing news and updates