Monday, 21 February 2011

Flood-hit property owners have cover pulled from them

An article written by Ali Hussain appearred in yesterday's (20th February 2011) edition of The Sunday Times. Entitled "Insurers pull cover for
flood-hit property".

The information was provided by Neil Cook an Insurance Broker with TR Youngs (Trading as Allstlyles insurance), but unfortunately some of the information was not correct.

Below is the article that has been corrected by Neil Cook

Some of Britain’s biggest banks are refusing to renew buildings insurance for homes at risk of flooding, despite a government agreement with the industry to protect more than half-a-million vulnerable properties.

A customer of HSBC was refused cover because his home was deemed too risky. The bank passed the policy to a different underwriter and declared that the customer was no longer its responsibility. A Lloyds customer was unable to sell his property because the bank would not extend cover to the purchaser.

The lack of cover has forced some homeowners to knock tens of thousands of pounds off their asking price to secure a sale. That means bargains for buy-to-let landlords, who are able to use commercial insurance cover.

The Environment Agency estimates that 500,000 homes are at high risk of floods. This would normally make them difficult to insure but under a “statement of principles” agreed by the industry and the government, insurers are committed to renew buildings insurance cover for existing customers — and extend it to buyers of their properties — provided there is adequate flood defence spending in place.

However, the government has slashed spending by 27% to £259m in 2011-12 and multi-million-pound defence projects in high-risk locations such as Leeds, Morpeth, Thirsk and York have been shelved.

Last week, the government finished a three-month consultation on renewing the agreement when it ends in June 2013. Malcolm Tarling at the Association of British Insurers (ABI) said: “The cuts are not helpful in securing a new agreement.”

Some insurers are already reneging on the agreement, according to industry experts. Neil Cook at TR Youngs , the specialist broker, said he had dealt with about 200 cases related to non-renewals because of floods in the past 12 months, and the “vast majority” of these involved policies issued by high street banks.

Neil Stoker, 48, of Morpeth, Northumberland, was refused flood cover by HSBC when his policy came up for renewal. He had made a £58,000 claim after severe flooding in September 2008.

HSBC said it no longer had any responsibility to cover his home because it had transferred some of its buildings policies to an underwriter, Hardy, in January 2009. “We ceased underwriting household insurance cover at the beginning of 2009,” the bank said. “As such, the terms applied on any subsequent renewals are a matter for the new underwriter.”

Maria Harrogate, 54, of Keswick, Cumbria, was refused flood cover by Canopius when her policy was due for renewal last year. She made claims for flood damage in 2005 and 2009. When the policy ran out in August, the firm refused to include flood cover in the renewal because it said there was no evidence of any planned improvements in flood defences in her area. Harrogate instead found flood cover through specialist broker Neil Cook.

Rias, her previous broker, said: “Until June 30, 2013, Rias and its panel of insurers has committed to continuing to offer flood cover to existing domestic customers at significant flood risk, provided the Environment Agency has announced [flood defence] plans and notified the ABI of its intention to reduce the risk for those customers. Unfortunately, at the time of Mrs Harrogate’s renewal, Canopius, and other insurers, did not have this confirmation.”

Alasdair Turnbull, 64, also from Morpeth, said his flood cover was stopped after he made a £96,000 claim from Castle Cover, an over-50s specialist. The policy was initially underwritten by Axiom. However, Axiom said it had stopped providing services for Castle in 2009, meaning that Turnbull is no longer its customer.

Axiom said it would have continued covering Turnbull if he had approached it directly. However, the letter he received from Castle informing him that flood cover was being withdrawn read: “Axiom and Castle Cover will not be offering a renewal policy this year.” It advised him to “seek alternative insurance”.

Charles Robinson of Rikard, an estate agent in Morpeth, which suffered extensive flooding in 2008, said only five floodaffected properties in the town had been sold since. Three of these went to buy-to-let investors who were able to secure commercial insurance policies.

Peter Harvey, 41, a fund manager, and his wife Venetia, 40, were unable to sell their home in Aldworth, Berkshire, last year because their insurer, Lloyds TSB, would not extend buildings cover to a potential buyer. The property was flooded in 2007 and Lloyds paid a claim of more than £60,000.

The couple eventually found another insurer, through TR Youngs, that would pass cover to a new buyer. They completed the sale last month.

Lloyds denied it had refused to extend cover to the potential buyer because of the flood claim but would not specify the reason for its refusal.

Richard Benyon, environment minister, told The Sunday Times: “I am working closely with the insurance industry to ensure flood cover continues to be provided beyond 2013. Helping people reduce the chance of their home being damaged by flooding is important and can help keep insurance widely available and affordable.”

Be prepared for the worst-case scenario
How can I get cover?

If a mainstream insurer refuses to cover you, or raises your excess to unmanageable levels, it is worth approaching a specialist such as. Mary Dhonau, a floods specialist ( Can I check if I am at risk?
See the flood map at

Find out more about Insurance for flood damaged Property Here

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