Canvey Island and Home Insurance

esure declined to offer a Home Insurance estimate this week, for an existing home in the Canvey Island area. This may well undermine the intention to develop new estates on Canvey as mortgage offers may be jeopordised especially if a new agreement cannot be reached between the Government and Insurance brokers. The current agreement is due to end next year 2013, after which insurances may be subject to increase in cost or at worse declined for homes in the Flood Zone.

This is Money.co.uk commented in September2011:-

“Millions of families living in flood-risk areas are being threatened that they will be placed on a blacklist, which could leave their homes uninsurable and unsellable.

About 5.5 million households classed as ‘at risk of flooding’ are caught in the middle of a tug of war between the profit-hungry insurers and a cost-cutting Government.

An agreement called the Statement of Principles is in force between insurers and the Government.

It states that insurers will cover existing homes in flood-prone areas — although they can choose to increase premiums. Insurers also agree to continue covering existing homes in areas of very high flood risk under the deal — so long as the Environment Agency has announced plans to cut flood risk in those areas within five years and the properties are already insured.

But this deal expires in June 2013 and as, yet there, are no signs of a new agreement being struck.

Insurers have a list of demands to ensure local councils are not allowed simply to wave through applications for new homes in flood areas.

These include promising proposals to hand Whitehall planning powers over to local councils do not result in more homes being built in areas at high risk of flooding.

Insurers also want proof a £150 million budget cut to flood defence funding won’t put more homes in danger and that Government policies will reduce flood risk.

If these demands are not met, many will refuse to give cover or hike premiums to unaffordable levels. But the Government is under huge pressure to build new homes — there will be a 750,000 shortfall by 2025 — and has identified many flood plains as potential areas for this.

The standoff could see those living in flood areas unable to get a new mortgage or home insurance, unable to move, or made to wipe tens of thousands of pounds off their property value if they want to move.

Charles Tucker, chairman of the National Flood Forum, says: ‘People will become trapped, unable to move to a new job, unable to upsize as a family grows, unable to downsize when they want to retire.

‘The consequence for communities is blight and a downward spiral of desperation and deprivation.’

A deal has to be struck by June 2013, when the agreement which forces insurers to give cover expires. However, a number of floods that have devastated communities — and cost insurers billions of pounds — have forced a deadlock.

Campaigners believe insurers are already hiking premiums — with flood victims seeing home insurance costs rocket by up to 500 per cent in the past two years, according to charity the National Flood Forum (NFF).

From July 2013, insurers will be allowed to select whom they cover. Some homeowners in Workington, Cumbria, which was flooded in 2009, have been quoted excesses for buildings cover of up to £10,000.

The maximum buildings insurance excess that many leading mortgage companies including Lloyds, Halifax and Santander, will allow is £1,000.

The town of Morpeth in Northumberland faced massive flooding in 2008, hitting 950 homes. Alan Bell, chairman of the Morpeth Flood Action Group, says many locals have been unable to sell their homes because they cannot get affordable home insurance.

According to a survey by the group, buildings insurance premiums in the town have risen by an average of 72 per cent in the past two years, while others are struggling to get cover.

Mr Bell says: ‘Estate agents are seeing deals falling through as buyers can’t get affordable insurance.

‘Few properties have sold in Morpeth since the floods and most of those have been sold to landlords at discounted prices.’

A spokesman for the Department for Environment, Food and Rural Affairs says: ‘We are working closely with the insurance industry to ensure flood cover continues to be provided beyond 2013.’

But insurance insiders have told Money Mail talks are not ‘where they want them to be’.

A spokesman from the Association of British Insurers says: ‘We want to continue to be able to make flood insurance widely available after 2013. But we need to see the Government implement a long-term strategy, which shows investment in flood defences is helping to reduce the risk in areas prone to flooding.

‘It’s vital the current Government proposals to reform the planning process do not lead to new developments in high flood-risk areas.’”

 

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