Insurers may not cover people in high risk flood areas
November 3, 2007
In June and July of this year many areas of the UK were severely affected by torrential rain resulting in severe flooding.
This flooding caused thousands of pounds worth of damage to many homes, and in addition to the chaos that it caused for homeowners it also resulted in huge numbers of claims made to insurance companies. Insurers were forced to pay out billions of pounds in damages as a result of these claims.
As a result of the situation the insurance industry has been urging the government to increase investment into flood defences so that this type of situation is less likely to arise in the future.
The government did agree to increase its spending on flood defences, but the insurance industry is now angry over the amount that is being invested and the time over which it will be invested.
Although the government has agreed to increase investment into flood defences the increases will take place over a period of years and not right away, leaving insurance companies at risk of being hit with further claims if the flooding occurs again.
One official stated: ‘Government spending for the next three years is less than we were asking for, even before the floods.’
Many officials from the insurance industry have now stated that customers that live in higher risk flood areas could find that they either have to pay a fortune for the cost of cover or that they cannot get cover at all against flooding, as insurance companies do not want to have to risk paying out so many claims for such high amounts in the future.
This could mean that a similar situation with flooding in the future resulted in many homeowners having to find the money from their own pockets to pay for the damages and losses.
Alan Wright
3rd November 2007
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