Flood Re – Scheme for those at risk
WHAT EXACTLY IS FLOOD RE? Flood Re is a scheme that was created by the Government and Insurance industry in 2016 to ensure homeowners in high-risk flood areas could still find affordable home contents and buildings insurance. Today, more than 350,000 UK households benefit from the scheme and its available to listed property owners in exactly the same way as any other property.
HOW DOES FLOOD RE WORK? It’s funded by a programme known as reinsurance – because that’s what the ‘Re’ in Flood Re stands for. Insurance companies take financial risks by insuring people and their property. But when a customer looks too risky – e.g. their home is known to be at risk of flooding – insurers can refuse to quote a premium, which is known as “Declining Cover” because the Insurer doesn’t want to cover Flood risks. Alternatively an insurer can offer a policy that excludes flood cover or sell a policy where the flood cover is passed to another insurer for a proportion of the premium. This last point is known as “Reinsurance”
HOW DOES “FLOOD RE” AFFECT ME? When you choose an insurance policy, it’s more than likely that your insurer has signed up to Flood Re, but don’t take this for granted. If the insurer has subscribed to Flood Re, you don’t have to do anything as your insurer will pay Flood Re part of your insurance premium to make sure that you have appropriate Flood cover in place.
“Flood Re” receives money from a large number of different insurance companies and consequently individual insurers benefit by combining their exposure to Flood claims with other insurers. Individual insurers can decide if they’ll offer you a policy and use “Flood Re” for it. It’s not uncommon for an insurer to offer Flood Cover on one of its products as it is included in the Flood Re scheme, but also have other products that specifically exclude
Flood cover, so it’s important that you know if your policy has Flood cover included when you take out cover. Don’t assume that every insurer uses Flood Re to reduce their risk exposure.
There are some simple eligibility factors to qualify for “Flood Re” such as the householder or the householder’s immediate family must live in the property for at least some of the time during the policy period. The majority of listed properties were built at a time before the environment agency existed and when planning controls were a lot less stringent than they now. As a consequence, many listed properties are located in known flood areas.
In the event that you need to make a claim for flood-related damage and your insurance policy includes cover for Flood, you simply follow the usual claims process and your insurer will settle your claim directly with you and then recoup its money from “Flood Re”
IS “FLOOD RE” DIFFERENT TO OTHER REINSURANCE COMPANIES? “Flood Re” is no different from any normal reinsurance company except for one major difference:
Without “Flood Re” insurance providers could have decided they simply couldn’t afford to insure people living in flood zones, which would have left thousands of homeowners without protection. So the Government stepped in and worked with the insurance industry to set up “Flood Re” as a “not-for-profit scheme”. Consequently it means households can still access affordable insurance including Flood protection.
Insurers can now continue to offer affordable insurance including Flood cover and homeowners can still find cover and not be left in the unfortunate position of being underinsured.
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DOES “FLOOD RE” HELP TENANTS? For those people who rent a home in a flood risk area, your home contents insurance policy could be backed by “Flood Re.” But it is important that you check that your landlord has appropriate insurance cover in place as most landlord policies offer help towards rehousing costs.
DO I NEED TO DO ANYTHING DIFFERENTLY? It depends on how you buy your insurance policy. “Flood Re” has no direct control over the prices or terms that individual insurers apply to their products. Insurance is a complex issue and every insurer has a different approach to how they design their products and set their prices. Using an expert such as a Broker is the best method of making sure that you have appropriate insurance, particularly if your property is at risk or has flooded previously. Your insurance advisor will know which insurers to approach and which products include “Flood Re” to make sure that you can purchase appropriate cover at an affordable price.
IS FLOOD RE ALWAYS GOING TO BE AVAILABLE TO HOMEOWNERS? “Flood Re” is set to end in 2039. But assuming that it is successful, there’s every indication that it will continue in some form beyond 2039.
If you have any questions about your existing Home Insurance and need to check whether it includes Flood Cover, call The Club on 01795 844939 or email
kirstie@lpoc.co.uk
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