How Flood Re will change home insurance

Digby Bodenham By Digby Bodenham

From April 4 2016, people with homes in flood risk areas will be able to get cheaper buildings and contents insurance thanks to a collaboration between the the UK government and the insurance industry that has produced the Flood Re scheme.

We offer an exclusive 10% cashback deal with HomeProtect, which is a member of the Flood Re scheme. Join our group to access the offer, and get a quote online.

Our guide explains:

Why is it so difficult to get insurance for homes in flood areas?

Recent floods across the UK have resulted in many claims, this has caused insurers to raise their prices for houses in flood-prone areas.

Some insurers even stopped offering cover for those houses – with fewer insurers, there is less choice for consumers, and prices tend to rise in such markets.

This has made home insurance expensive or entirely unaffordable for people in flood-risk areas.

Incidents of flooding are on the rise and the issue of people struggling with premiums and claims has become such a problem that the government has had to intervene. That is why Flood Re exists - it will reduce insurance costs for most people affected by flooding.

How does Flood Re work?

The government put the foundations in place for Flood Re but it is essentially run as an independent company. It works in the background of normal policies offered by insurance firms, so it’s unlikely you’ll come across it as a customer. In short, insurers that sign up to Flood Re will be able to offer you cheaper home insurance if you live in a Flood Risk area.

Flood Re has produced a video explaining what it does. We'll take an in-depth look at the details of the scheme later in this article.

What this means for you is three things:

  1. Flood-risk homes will save money on their insurance after April 4 – see below for how much
  2. Homes need to be eligible under Flood Re rules to benefit – see our summary of the criteria
  3. Insurers need to sign up to Flood Re to offer you lower prices - so to find a good price, you need to find the insurers that are taking part – find out how to do so

We've negotiated exclusive cashback on home insurance with HomeProtect, which is signed up to Flood Re. If your home is in a flood area you can join our members who are in a similar situation to unlock the offer.

How much can I get cheaper home insurance?

Flood Re is available to homes in council tax bands A to H or equivalent.

MoneySuperMartket.com estimates that a band A flood-risk home currently paying £1,140 for combined buildings and contents insurance could pay as little as £650 after Flood Re is introduced in April.

It also says someone in a band G home could expect their premium to fall from £1,850 to £1,550.

The savings are so significant that it might be better for some people to cancel their old policies as soon as they can, even if there is a fee to leave their previous provider.

For example, AXA and Aviva home insurance charge £30 and £29 respectively to cancel a policy. If you are paying monthly the policy will be cancelled immediately.

The home in band A in the above example would immediately save money if they had been paying monthly. Even if they had a month left on the policy and joined a Flood Re provider they would still save about £10 after the cancellation fee is taken into account.

Be sure to check with your insurer before you cancel to make sure you’re aware of all fees and charges you could be liable for. For example, if you have paid for a year’s policy upfront, some insurers will not give you a refund.

People in flood risk areas can save more money on top of Flood Re by joining our group to unlock an exclusive deal with HomeProtect.

The best home insurance for flood risk areas

Flood Re should be making insurance premiums for flood-risk houses more competitive. There are now more than 40 providers that have signed up to Flood Re and the scheme has backed more than 53,000 policies.

That means there is a lot of scope for consumers to shop around to find cover that suits them at a reasonable price.

Unfortunately, that makes it difficult to say one provider is better than another because different companies may be better for different areas or properties.

To make the search easier, we've listed the eight firms from our list of the 10 best home insurance companies that have signed up to Flood Re in the order they appear in the original top 10.

1. Hiscox

2. M&S Bank

3. LV=

4. Nationwide

5. More Than

6. Aviva

7. Lloyds Bank

8. Churchill

Have a look at our guide to the best home insurance to find out how we've rated these companies.

They may be good options for people with standard homes in flood areas but if you have what insurers describe as a non-standard home (listed buildings, a coach house etc), you may need cover from a specialist insurer.

Our flood risk insurance group with HomeProtect features cover for non-standard houses in flood areas, and it includes an exclusive cashback deal.

List of Flood Re insurers

More than 40 insurers have signed up to Flood Re. The list on the Flood Re site should be up-to-date.

Here are some of the insurers offering cover through Flood Re:

How to save money with Flood Re

Check the above list to see which insurers have signed up. You can then get quotes from these providers knowing they should be cheaper than companies that are not part of the scheme.

You might find the insurer you currently have a policy with is on the list. If that is the case it is worth contacting them to get a quote for a Flood Re policy. Even if you have to cancel your existing cover and pay and exit fee you may still save money starting a new policy with them under Flood Re.

In fact, many people in flood risk areas could save money by immediately cancelling and taking out a new Flood Re policy. Take a moment to compare quotes and consider your cancellation fees to calculate if it is worthwhile.

In addition, you could get a quote using the special offer we’ve negotiated for people in flood risk areas, with HomeProtect. They specialise in high-risk homes and it is offering members of our group for people at risk of flooding an exclusive cashback offer.

Who is eligible for Floor Re?

Most people in the UK living in areas that have flooded should be eligible for Flood Re, although there are restrictions so some homes are excluded.

It is only open to residential properties, so flood business insurance is not part of the scheme.

Other key inclusion criteria are that the home must have an A to H council tax band or equivalent, it must be built before 2009 (this is partly to discourage developers from building new homes near rivers or flood areas) and if it is a flat is must be in a block of no more than three homes.

Flood Re has detailed eligibility criteria on its website here, which also says B&Bs that aren’t paying business rates and farm cottages are included.

Homes on the Isle of Man or the Channel Islands are not eligible.

If you’re looking to buy a property you might find these maps of flood risk areas useful – The Environment Agency's flood map for planning, The Environment Agency's map of river and sea flood risks, CheckMyFloodRisk.co.uk and the government's flood warning service.

What if I’m not eligible for Flood Re?

If your home is excluded from Flood Re you might need to (continue to) use a specialist insurer.

You may still be able to benefit from our exclusive offer with HomeProtect because it is experienced in covering high-risk homes. Even if you’re excluded from Flood Re you can join our group for people in flood-risk areas to access money back on your policy.

Or read our guide to the best home insurance policies, which includes a section on specialist home insurance.

Details of how Flood Re works

One thing Flood Re's video doesn’t make clear is that although all insurers will pay into the Flood Re pot to fund it, they are likely to pass that cost on to consumers. All home and contents insurance policies are expected to increase by about £10 as a result.

But for 83p a month, UK consumers with home insurance will be helping thousands of people who currently have no choice but to pay exorbitant premiums.

The other Flood Re funding tributary is tariffs insurers have to pay for each home they cover using the scheme. You can see the costs and expected savings in our section on cheaper premiums.

Another point not covered in the video is that not all insurers have signed up to offer insurance through Flood Re. All insurers will be paying into it but they have to opt in to be able to cover homes in flood areas and take from the pot to cover payouts.

So while the programme will reduce insurance costs for many people it might not significantly increase the amount of insurers to choose from.

We know that HomeProtect is part of the scheme and Bought By Many members can access and unique offer on top of the Flood Re savings through our home insurance for people in flood risk areas group. You can join for free to access the offer.

Please get in touch with us if you have any questions about Flood Re or specialist home insurance.

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