Homes at risk as flood insurance talks break down - Specialist Insurance Articles

Home insurers and the government have stepped back from crisis talks over cover for homes and businesses in flood risk areas.

Millions of properties are facing higher insurance premiums as negotiations have broken down.

Owen Paterson, the minister leading the government side of the talks, has announced no legislation is expected for about a year.

The row between insurers and the government is over a ‘statement if principles’ that ends in June 2013.

The statement basically states that if the government spends money on decent flood defences, home insurers will offer cover to homes owners and businesses in areas liable to flooding.

However, both sides have been arguing for months about new terms for continuing the agreement.

Meanwhile, the government’s chief scientist has warned extreme weather, including more rain and floods is here to stay as a result of pumping hothouse gases in to the atmosphere in previous decades.

Although hinting at legislation, the minister has given no indication at what the new law may say.

Home owners and businesses are left paying the price, as insurers have no cap on pricing under the agreement, which simply states they should offer cover to flood risk property.

The result is premiums could increase for all home and business insurance customers, while home and contents insurance for some properties could be too high to be affordable.

Insurers understand that this means some properties are unmortgageable because owners cannot afford buildings cover, which is typically a condition of a loan.

So it looks like while there may be a solution in the pipeline, the insurance industry and concerned homeowners will have to remain in limbo for a little longer.

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