Timms, Matt Rice, Discusses the Flood Re-Insurance Scheme

The Flood Re-insurance scheme (Flood Re) has been set up to help those households who live in a flood risk area find affordable home insurance. Flood Re is intended to enable eligible homeowners to obtain affordable policies with fixed-rate premiums. The scheme came into force on 4 April 2016 after receiving regulatory approval from the Financial Conduct Authority and Prudential Regulatory Authority.

How The Flood Re-Insurance Scheme Works

Insurers will pay into a central fund every year. This is set at £180 million for the first 5 years and will be reviewed every fifth year to reflect the need for the transition to risk reflective premiums over Flood Re’s 25 year existence. Flood Re will not set prices for home insurance, but will take the “flood risk” element of home insurance from an insurer in return for a premium – that will be capped based on the property’s council tax band. Homeowners will purchase insurance as usual, and the central fund will then be used to reimburse insurers for valid claims.

Eligibility

To qualify, the following criteria must be met:

•The insurance contract must be held in the name of, or on trust for, one or more individuals or by the personal representative of an individual;
•Properties must have a domestic Council Tax band of A to H;
•Properties must be used for residential purposes;
•Properties must be a single residential unit or a building comprising of two or three residential units;
•Properties must be insured on an individual basis or have an individual premium;
•The holder of the policy, or their immediate family, must live in the dwelling for some or all of the time or it must be unoccupied;
•Properties must have been built before 1 January 2009; and
•Properties must be located within the United Kingdom.

•In practice, this excludes a number of properties and full details of the exclusions are set out at www.floodre.co.uk

It would be wise for prospective buyers and tenants to establish whether the property being looked at is at a high risk of flooding and, if it is, whether it falls within the scope of Flood Re. If it does not, they should check what insurance cover is available, at what price, and on what terms.

Flood Re makes no difference to how you purchase your home insurance, whether that’s through a price comparison site, directly from an insurer or through a broker. Once you have purchased your policy you will always deal with your own insurer even if you need to make a claim. If a claim is made, Flood Re will work ‘behind the scenes’ with the insurance company, to reimburse them for any payments they make to their customers. You do not need to contact Flood Re directly.

For further information visit www.floodre.co.uk or for information about a potential move or a conveyancing quote, please contact Matt Rice on 01530 564498 or at m.rice@timms-law.com

Matt Rice
September 2016