Partner Katka Wigham, in our Commercial Property team, highlights the Flood Reinsurance Scheme.
The flood reinsurance scheme known as 'Flood Re' was launched at the beginning of April.
Flood Re is a reinsurance company, which means it enables insurance companies to insure themselves against losses caused by flooding. It is a not for profit organisation. Its aim is to promote the availability and affordability of flood insurance to those who own and live in properties in flood risk areas. This is a required legislation from the Government.
Customers looking for cover will buy insurance from insurers or via brokers in the usual way. If the insurance company considers the property to be above a certain level of risk, the insurance company will then approach Flood Re for cover.
A customer making a claim will do so in the usual way, and have the remedial works completed at the expense of their insurer.
The insurers paid the set up costs of Flood Re, which are in excess of £20 million. This is funded partly by the insurers and partly by a charge for each policy passed to Flood Re. The theory is that the insurer should be able to offer a lower premium to cover higher risk properties.
It is expected about 350,000 homes will meet the eligibility criteria, representing about 2.0% of households.
It should be noted that properties built after 1 January 2009 are not covered by Flood Re, so as to discourage builders from developing in known risk areas. Flood Re does not cover businesses and it is not available for blocks containing more than 4 flats.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
