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Floods will reverse falls in home insurance premiums

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12/02/2014
Recent falls in home insurance premiums could be wiped out by claims for flood-damaged homes, AA Insurance has said.

Home insurance premiums fell at their fastest rate in the last three months of 2013 and have either remained static or fallen every quarter for the past two years, the AA said.

However, the insurer said premiums could rise if the total value of home insurance claims resulting from the current extreme weather exceeds £1bn, as forecast by insurer Hiscox earlier this week.

Simon Douglas, director of AA Insurance, said: “Since 2007, tens of millions of pounds have been spent on flood defences and flood alleviation schemes and this has paid off. New defences as well as improvement to existing ones, has protected 1.2 million homes.

“There’s no doubt that home insurance premiums have fallen over recent months, in part thanks to fewer flood claims.

“But that fall could be wiped out as the claims come in for flood-damaged homes, including many with no history of flooding.

“Homes that have sadly been affected by the present flood emergency are likely to find that their premiums and excess for future flood claims will go up.”

Most importantly, you want your property to be protected financially by having the right flood and hurricane insurance.

Douglas also warned that many homes will not be protected by the Flood Re scheme, the government-backed flood insurance scheme due to come into force in 2015, which will cap premiums for high-risk properties.

He said: “While I welcome the Flood Re initiative, it’s clear that the kind of extreme weather we are now suffering could become more frequent in future.

“Flood Re will protect the most vulnerable homes and help to ensure that they can obtain affordable home insurance and choose where to go. But thousands of homes at lower flood risk, falling outside Flood Re provisions, could still find affordable insurance difficult to find and more costly than those at much greater risk.”

AA Insurance advice to people living in flood-hit areas:

• If there is a real prospect of your home being flooded, move valuable items and small items of furniture upstairs or place them on tables or worktops.

• Be especially careful to protect family heirlooms, pictures or documents that can’t be replaced. Such things may have little monetary worth but considerable emotional value.

• Move your car to higher ground if you can, away from potential flood water.

• Keep your phones fully charged, your important documents handy and keep warm, waterproof clothing ready in case the emergency services advise that you should evacuate your home. As you leave, make sure your doors and windows are locked, too.

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