Buildings insurance for properties deemed to be in flood risk areas
As a profession we are very used to being “it with “hot topics” and legislation, which in turn means that we have to advise our clients of new developments and as to how they are likely to have an impact on their property sale or purchase.
The latest legislation which could have an enormous effect upon the housing market is the Water Act 2014 Provisions.
These provisions have been brought into being as a direct result of the huge cost to the insurance industry arising from the 2007 and 2013 floods and also the constant need for successive governments to provide more housing, which in turn has resulted in an ever growing number of developments being built on or close to identified flood plains.
In the UK flood risk insurance was previously provided by insurer’s under the ‘Statement of Principles’ in accordance with an agreement between the Association of British Insurers and HM Government.
The Statement of Principles required insurers to offer flood insurance to homes and small businesses where the risk of flooding was lower than a 1 in 75 year event (where the property is already insured) and for those properties at a greater risk, insurance was available on condition that flood defences are planned to be built.
The Statement of Principles has now come to an end. However, the Association of British Insurers has continued to honour the spirit of the Statement.
Legislation has now been passed which introduces different principles linked to insurance premiums which are designed to set a limit on what premiums will be (however not all properties are covered by this). There is however no limitation on insurance excess for flood risk claims.
This legislation came into force in April 2016 but the full implications as to the availability of flood risk insurance, premiums or excess are yet to be discovered. It may however result in insurance premiums going up – and may restrict what insurance is available for affected properties.
For more information with regard to the above or to discuss any other aspect of a residential property transaction please do contact us at the office most convenient for you. Details can be found on the contact page of the website.