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Could flood victims be paying the price?

Could flood victims be paying the price?

Category: Home insurance

Updated: 12/02/2014
First Published: 12/02/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

With much of the country being battered by storms, flooding and untold damage, thoughts could well be turning to the clean-up costs. Homeowners that have borne the brunt of the wettest January on record – and are suffering further still in February – might be worrying about whether their insurance policy will cover them, and if so, how much their new premiums could be as a consequence.

It's a worrying time and one that's unfortunately confounded by financial fears, with insurance providers Hiscox warning that the total bill could amount to as much as £1bn. It's a long way from the £3bn bill after the floods of 2007, but with more wet weather on the horizon – and so far over 5,000 homes being affected – the toll could still add up.

Industry experts are predicting that home insurance premiums could rise in order to cover the cost, with Deloitte expecting insurance claims to average
£30,000 to £40,000 per household. Although there's no definite indication yet that premiums will need to increase, things could change once the total cost is known – meaning homeowners could be left feeling the pinch long after the clean-up.

However, all might not be lost for those in flood-hit areas – the Flood Re scheme is set to launch in 2015, being an agreement between insurers and the Government that means premiums will be capped, hopefully meaning even those in high flood-risk areas will be able to keep their premiums affordable.

Ed Miliband has called for Flood Re to be implemented even quicker to ensure homeowners aren't left fitting the bill, and has also urged the Government to put pressure on insurance companies to ensure any claims are paid as quickly as possible.

Encouragingly, though, it's the insurance companies themselves that seem to be coming to the rescue of homeowners. So far Nationwide, HSBC, NatWest and RBS have already pledged to help flood victims by offering various levels of support, such as emergency phone lines, financial flexibility including overdraft and credit extensions, loan and mortgage repayment holidays, and the removal of limits on emergency insurance payouts so customers can get the support they need as quickly as possible.

Hopefully it'll mean flood victims will have fewer financial pressures to worry about and won't be left with extra burden, ensuring they can concentrate on battling through the remainder of the bad weather before getting their home back up to scratch.

What next?

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