A deluge of complaints from worried landlords is hitting the desks of insurance companies as they are paying up to 500% more for insurance if they have a buy to let property in a flood risk area.
After the government and insurance firms spent years thrashing out a deal for homeowners which pegs premiums at no more than £540 a year for private homes in flood risk areas, landlords have suddenly realised they are excluded from the agreement.
As a result, their insurance costs have soared in recent months.
The Flood Re Scheme levies £10.50 from all home insurance policies to build a fund of £180 million to settle claims for flood damage.
However, Flood Re excludes commercial property, and insurance firms consider buy to let and houses in multiple occupation (HMOs) in that category.
Private homebuyers who purchase a former buy to let are included in the Flood Re rules, but landlords buying a home in a flood risk neighbourhood are automatically excluded.
“Many will find they have to pay for the insurance regardless of the cost because it is a condition of their mortgage and some are facing premiums that cost five times more than last year ,” said a British Insurance Brokers Association spokesman.
The spokesman explained insurers base prices on risk. The risk is assessed from maps and research by the government’s Environment Agency and insurance companies.
The bad news is even if a property does not show up as a risk on the government maps, insurers may still hike the premiums as their own secret data may show the property is in somewhere they consider a problem area.
BIBA suggests landlords contact their find a broker helpline on 0870 950 1790.
“There are many different providers with different data and approaches to flood risk,” said the spokesman.
“The brokers will also advise activities you can do to make the risk more attractive to insurers, from signing up to the environment agency flood alert system to how to get a report from the environment agency proving you are actually low risk.”
Buy to Let Flood Cover up by 500% – http://t.co/S7PT5mEIrv
— LandlordZONE (@LandlordZONE) February 10, 2015