- What is Flood Re?
- How does the Flood Re scheme work?
- Who pays for Flood Re insurance?
- What homes qualify for the Flood Re scheme?
- Does Flood Re cover commercial property?
- How do I buy Flood Re insurance?
- Who are the Flood Re participating insurers?
- What happens if I need to make a claim for flood damage?
- How can an insurance broker help me?
According to the Environment Agency, more than five million UK homes are at risk of flooding. The annual cost of that is estimated to be £1 billion. For households affected by flooding, home insurance has often been a worry with sky-high premiums leaving many without cover. That changed in 2016 with the launch of Flood Re which was designed to offer protection to at-risk homeowners.
Flood Re is a not-for-profit organisation set up by the government and the UK’s insurance industry. The initiative is there to provide affordable flood insurance for homes that are at high risk of flooding.
The scheme is temporary and was launched in 2016. It will continue until 2039 when it’s hoped revised modelling will mean flood insurance will be offered on a ‘risk-reflective’ basis. In other words, insurers should be able to offer cover based on the actual risk of flooding.
Essentially, Flood Re is a re-insurance scheme. Re-insurance is when insurers pass on certain risks to a re-insurer because they either don’t want to, or cannot afford to, cover that risk.
In this case, your home insurer would pass on the flood risk element to Flood Re (the re-insurer). So, if you made a successful claim for flood damage, your insurer would pay out but then recoup those costs from Flood Re.
All of this happens automatically so the policyholder won’t have to deal with Flood Re directly, the entire process is dealt with by the home insurer.
The Flood Re scheme is funded through a variety of means.
- A levy – all UK home insurance providers must pay into the Flood Re scheme.
- Premiums – Flood Re charges your insurer a fixed premium for accepting the risk. This cost is based on the Council Tax band of your home.
- Excess – an excess also applies to claims, but this is capped at £250.
This combination of levies, premiums, and excess fees, raises £180 million each year. This money is then used to cover the cost of claims.
Bear in mind that Flood Re has no influence over your premium or excess as this is still set by your home insurer (which is why you should always compare policy prices).
Not all homes are eligible for Flood Re, to qualify, your home must:
- be in a Council Tax band;
- have been built before 1st January 2009;
- be used for residential purposes only.
Flood Re only covers homes built before 2009 because it was expected that this cut off would encourage developers to build away from flood risk areas.
Generally speaking, no. Flood Re does not cover properties subject to business rates but you can mitigate the risks by taking precautions.
It’s also worth knowing that several residential properties don’t qualify either (such as housing association homes and blocks of more than three flats).
Other examples of properties not covered by the scheme, include:
- farm outbuildings;
- buy to let properties that do not meet the eligibility criteria shown above;
- multi-use properties.
If your home qualifies for Flood Re coverage and your insurer is part of the scheme, your home insurer will arrange everything.
Similarly, if you use an insurance broker like Alan Boswell Group, we’ll do our best to ensure your home is taken care of if you happen to live in a flood risk area.
Most insurers participate in the Flood Re scheme, so you won’t need to use any specialist providers. If you’re worried about flooding or you know your home is in a flood risk area, you can check which insurers have signed up on the Flood Re website.
If you need to make a claim for flood damage, contact your home insurer as normal. They will manage the claims process and you won’t need to do anything differently.
The easiest way to think of Flood Re is that they operate behind the scenes and it’s highly unlikely that you’d ever have to deal with them directly.
Damage caused by flooding is covered under your home insurance. However, if your home is at greater risk or has suffered from flooding in the past, you’ll need to ensure the cover you have is sufficient. That’s why you’ll often be asked whether your property has ever flooded or if it’s close to any water courses. You may also be asked how high your property is in relation to any nearby rivers or the sea. All of these questions help insurers gain an understanding of the flood risk your home faces.
To help ensure you get suitable flood cover, you can use an independent insurance broker like Alan Boswell Group. We work with a wide network of insurance providers who are part of the Flood Re scheme so you can rely on us to find a policy that suits your needs and your budget. For more information or to speak to our home insurance team, contact us on 01603 218000.