Home owners in flood-risk areas ?may not get insurance cover? next year, the Local Government Association says.
Householders are being denied flood insurance because of delays by the Government and insurers coming to a new deal on affordable cover, according to the Local Government Association.
Discussions between the Association of British Insurers (ABI), the government and lenders led to agreement on a ?statement of principles? in 2008 for the insurance market, under which the majority of customers living in areas prone to flooding have been able to continue to obtain cover.
Insurers agreed to continue to provide flooding cover to almost all homes, and the government undertook to invest more in improving flood defences. However, insurers have not guaranteed to provide cover where no improvements in flood defences are planned, while the ABI has long maintained that the statement of principles is only a temporary measure. It made it clear that they would not be renewed beyond June 2013.
With less than a year of the existing deal remaining, councils have found that some householders who have tried to renew their insurance in the past few weeks have been denied cover or quoted hugely inflated prices.
The LGA, which represents more than 350 councils in England and Wales, is warning that the longer government and industry stall on a new deal, the more households are likely to be denied cover and exposed to the risk of losing their homes in the event of severe flooding.
Councillor Clyde Loakes, Vice Chairman of the LGA?s Environment Board, said: ?The extreme weather we have seen over the past few weeks is a stark reminder of the importance of flood insurance. It is absolutely vital that government and the insurance industry come to a new deal on providing affordable cover as a matter of urgency.
?Households are now being refused cover and left exposed to the risks of damage and destruction. A new agreement should have been sorted long before now and the continuing delays are having a very real and severe impact on thousands of people who will be exposed to the risk of losing their homes if they are unable to find insurance.
The LGA?s concerns are echoed by the AA.
The car and home insurance broker says that the need for agreement between the insurance industry and the Government must be reached urgently.
Simon Douglas, director of AA Insurance says: ?More and more people will find it hard to obtain cover for their homes if they are one of the 330,000 identified to be in ?high risk? flood zones, as their next renewal will occur after the end of the current agreement and with no certainty of what will replace it.
?Some can only obtain or continue insurance if they agree to a high excess, if at all. Excesses as high as 10,000 for a flood claim are not unusual, a sum that most families would struggle to pay.?
Recent heavy rain has shown that the type of weather is increasingly determining which areas are flooded. Claims for flood damage are coming from homes affected by surface water run-off as well as rivers overflowing, meaning that many have suffered in places where there was thought to be little or no likelihood of flooding
It is estimated that recent flood claims will cost the insurance industry 500m.
But the ABI said it was wrong for the LGA to paint a picture of insurers leaving their customers in limbo on flood cover.
Nick Starling, Director of General Insurance at the Association of British Insurers said: ?Insurers continue to honour their commitments under the current agreement with Government, providing cover to their customers in high flood risk areas as a standard part of home and small business insurance.
?Insurers are determined that flood insurance remains available and affordable and we are currently in constructive discussions with Government to explore how we can achieve this.?
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