Defaqto’s 2008 Insight Report on the home insurance market makes interesting reading, or perhaps I should say, ‘interesting and grim,’  as some of its conclusions are enough to make any homeowner turn grey.

With 1 million homes at risk of flooding in the UK, many homeowners will have difficulty in the years to come in finding buildings and contents insurance, as insurers increasingly reject properties which are remotely risky.

With the ABI’s agreement with the Government over the willingness of its members to continue to insure flood-risk properties at breaking point, there will no doubt come a time when all properties in flood-risk areas will become uninsurable.

 Such properties are not only a personal liability, but unmortgageable and therefore unsellable.

As the report’s author, Defatqto principal, Brian Brown, says: “Such a threat to thousands of houses would have a massive impact on the already fragile housing market….. Already many householders in flood-hit areas are finding that new insurers will not take them on their books and that their existing insurer will only continue if they accept significant premium rises, coupled with significant excess levels.”

In fact, it is even worse than that. Halifax has started to increase the excess on properties  to as much as £350 for properties which are simply near to flood risk areas, and even for homeowners who have never made a flood-related claim. 

Brian Brown predicts that for some homeowners, the level of excess will force them to change the way they live. Changes will be needed in the construction standards of homes in flood plains, with features such as plasterboard walls and wooden floors being  having to be replaced with concrete flooring.

Electrical sockets will have to be installed well above ground level and homeowners will need to buy furniture which can be moved easily and at short notice.

Brian Brown warns that otherwise homeowners owning flood-risk properties will face a clean-up bill of £20,000 to £30,000 at least once every 20-30 years. Some householders have already begun to employ private companies to install individual flood protection systems for their homes, he says.

Most worrying of all is the fact that the Government collected more money in VAT revenue from flood repair claims in 2007, than it spent on flood protection measures in the same year.

It’s a bit like the sale of tobacco and the tax revenue it generates. We all know it’s bad for us, but it sometimes it seems as though it is the Government which is the most addicted.

To compare insurance products, visit Defaqto’s unique Compare tool:
http://www.defaqto.com/consumer/insurance/home/compare-buildings.aspx