Flooding Insurance & Your Business

The UK has recently been hit by one of the wettest months on record in November. Flooding has affected the country at several points during the year, but in the past month or so it has reached a new high. There have so far been 4 fatalities, 100 people trapped in a village in Somerset for 6 days and many hundreds of damaged homes, not to mention the loss in trade that has occurred across the country due to the floods. The effect on personal lives is devastating, equally so is the effect on what was a slowly recovering economy.

My Business Is In A Flood Risk Area. What Should I Do?

If heavy rains make it likely that your locality will be flooded there are precautions you can take to limit the potential damage. If you have more than one story to the building then move all goods of value upstairs. Sandbag doors and walls at ground level and take down any curtains that may be up. Check your insurance policy to see if you are covered in the event of flood damage. If you are not already covered you may find it difficult to add that cover at this stage. At present insurers are obliged by an agreement with the government to provide flood cover even to those in high risk areas, but this agreement runs out in July 2013. As most policies have a minimum of one year on them many insurers are now refusing to issue new policies until they are certain of what will happen next year.

What Agreement Do Insurers Have With The Government?

Called the Statement of Principles, the agreement between insurers and the government that has been in place for the past twelve years has ensured that all policy renewals would take place even for home owners and small businesses in high risk flood areas. Although the insurers had to take on these policies knowing they were more than likely to suffer a loss on them, they were forced to do so by the government. In exchange for this, the government promised to increase flood defenses across the UK. As we come up to the expiry date of the current agreement it has come to light that the government has not kept its promise. Over 300 of the planned flood defense projects have not even begun yet, and over 800 more have had their budgets cut severely. Talks about the new agreement have reached a standstill.

Why Has No New Agreement Been Reached?

Due to the failure of the government to live up to expectations in the last agreement, insurers are now asking for an overdraft to cover their funding should they continue to provide insurance policies for people in high risk areas. Defra are so far refusing, which has brought talks to a standstill. Insurance companies cannot afford to run at a loss, and are therefore concerned they will not be able to offer affordable cover from next year should they not get the government backing they need. When insurance software calculates the potential premiums for a policy taken out next year without government backing, it is estimated that around 200,000 home and small business owners will be quite simply unable to afford to insure their property.

This post was provided on behalf of www.schemeserve .com – the world’s first cloud based insurance software, including simple scheme management, online billing

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