If you can’t get insurance for your house, beware – the Royal Institution of Chartered Surveyors warns that uninsurable houses could lose up to 80% of their value and throw the homeowners into negative equity.

And it’s a flood risk that is most likely to make your house uninsurable.

According to a recent report 6.5 million homes are already at risk from flooding of which 1.5 million are in areas considered to be at high risk. By 2030 if global warming continues, this 1.5 million figure could more than double.

In January 2003 the Association of British Insurers (ABI) agreed the principles which committed insurers to offering buildings and contents insurance for properties in areas which are at risk of flooding once in seventy five years so long as flood defences were in place or to be built by the end of 2007.

It’s the responsibility of the Department for Environment, Food and Rural Affairs (DEFRA) to develop and maintain these flood defences but there’s widespread concern in the insurance industry that insufficient is being done. As a result the industry has warned that there could be widespread withdrawal of insurance cover if more is not done now to protect homeowners. In the mean time those in areas threatened by flood could find their insurance premiums soaring. In some cases premiums have already increases by more than 400% and in a tiny number of cases, cover has been withdrawn altogether.

Environmentalists have warned that unless DEFRA gets it’s skates on, the UK’s bill for flood damage could increase from the current £950 million a year to £3.2 billion. The average household flood damage claim costs insurers £30,000 and even localised events like the Boscastle flood of 2004 in Cornwall, cost the insurers £15 million. The government has completed flood defences in many high risk areas and protection for a further 80,000 homes is due this year, yet many areas remain vulnerable.

You can check whether DEFRA thinks your home is at risk of flooding by visiting www.environment-agency.gov.uk. The DEFRA maps were originally designed for planning purposes and provide information on a post-code basis.
Whilst many British insurance companies use this DEFRA information others like More Than, have their own flood maps which look at individual properties rather than post code areas. This means that if your insurer surcharges you for flood risk and uses the DEFRA information, you may still be able to get insurance at normal rates if an insurer using it’s own flood data identifies that your property is truly outside an at risk zone.

The ABI has emphasise the pressure on DEFRA to improve flood defences warning that unless the government continued to increase its spending on flood defences, the insurance industry may not continue their commitment to the 2003 principles. That would be bad news for many homeowners.