What to look for when renewing your policy
The good news-there is a scheme called flood re.
In recognition of flooding being an issue for so much of the UK, there is a government backed scheme for insuring properties that are at risk of flooding or have been previously flooded.
The aim is to keep premiums at a reasonable level for those who might otherwise find it difficult or very expensive to insure against flooding. The website is very informative and gives a list of all the insurance companies who are signed up to the scheme as well as how to assess eligibility and who pays etc.
There is also information on there about the BBB scheme. That is the build back better scheme which you may be able to use to get up to £10,000 to help make your property more flood resilient with flood doors, barriers etc. This is money over what is required to build back the property to its pre flood state.
Underinsurance
A subject very close to my heart! So, you really need to ensure that you are adequately insured when buying your insurance policy. I think most people are ok when it comes to buildings insurance here (total cost of completely rebuilding your property) as we tend to overestimate this if anything. It might be the contents that you get unstuck on! We certainly did on flood number 2. After flood number 1 we were ok on the contents as we had only had the extension built a week before we flooded so didn’t have loads of contents down there. We also got a flood warning that time so had time to save precious items and things of value. However, 2nd flood we got no flood warning, it was the middle of the night and just after Christmas so didn’t manage to save anything at all and had all Christmas presents and goodies in there 🙁 So we were underinsured on our contents!
Consequences of underinsurance
So the obvious one, even if the insurance company pay out the maximum on the premium it is still not enough to replace everything that was lost!
Then there are other less obvious ones.
top tip Carpets are counted as contents! Apparently it is an old insurance rule that is still in place from a time when you apparently rolled up your carpets and took them with you when you moved house! However, wood floors, laminate and vinyl are not contents-they fall under buildings-who knew!
Also, the definition of contents is anything that would fall or move if you shook your property or turned it upside down. This, as it goes, includes everything in the boundary of your property so garden, garage, shed contents are all included in this amount! I had a separate amount in our policy for “outbuildings” of £20k but I hadn’t realised this would only include the actual shed building not the contents of the shed, garage or garden. Also the garage is only included as separate if it is not attached to your house!!!
So then there is the “average rule”…..all insurers should make you aware of this (and the above) at the time of purchase but I am not sure how widespread or easy to find this guidance is for most. So in the event that you are underinsured, insurers can implement the average rule. Put simply, this means they only have to pay the percentage you have insured too.
Our example
We had £70k worth of contents cover for all the contents in our property. However, the actual amount of total loss if everything in the whole property needed replacing was nearer £110k!
I guess we hadn’t realised that we had accumulated so much after the last flood, or accounted for the influx of extra contents gained over the Christmas period, that outbuildings contents came under that amount or that carpets were included in that number.
Also I don’t think we ever envisaged that we would be so catastrophically hit that so much would be lost!
So the “value at risk” was actually £110k. This means that with our maximum being £70k we only actually had 64% of our total value covered. This in turn allows the insurance company to then only pay 64% of the maximum £70k. So that equates to £44,800. This is obviously pretty devastating for us. However, I am led to believe that in most cases the insurance do pay the full amount. Waiting to find out! Will update you.
Lesson here-really understand what is and isn’t included and the consequences of under insurance when buying your premium!
Us
Steve Churchley
