After the deluge comes flood cover restrictions and pricier premiums
UK scheme that guarantees flood cover for all regardless of property location could be template for Irish solution
Residents use a boat to navigate flood waters after a flash flood on the Lee Estate in Limerick City.
The recent spate of floods has extracted a terrible emotional toll on the people whose homes and businesses have been flooded. Not only that, but they have also incurred a significant financial cost.
And with insurers cracking down on offering flood cover to properties in flood areas, many have had to foot the bill for the damage themselves.
According to industry group Insurance Ireland, about 2 per cent of policies exclude flood cover. Given that there are about 2.35 million homes and commercial premises in the State, this equates to about 47,000 properties.
But is there any respite in sight for such property owners? Could a scheme pioneered in the UK offer some relief? And why are homeowners unaffected by the recent inundations set to face a 5 per cent increase in their home insurance premiums?
I’ve been flooded: Will I get insurance again?
A standard home insurance policy will offer flood protection as a routine benefit. However, if you have been hit in the past by floods, renewing such a policy will become considerably more difficult. A standard screening question before any company will quote you is that your property should not be “in an area with a history of flooding”.
“You have one shot at a claim. If you have a flood claim, invariably the insurance companies won’t renew the policies, or will do so but will exclude flood insurance,” says Seán Burke of Burke Insurances in Galway.
Indeed the National Consumer Agency surveyed eight insurers last August and found that none would offer a quote on a property that had previously made a claim due to flooding. But it’s not a hard and fast rule.
A spokesman for Allianz, for example, says the insurer will provide full cover to policyholders who reside in areas it deems as flood-prone, “provided they do not sustain more than one flood loss”.
Make more than one flood-related claim, however, and you can well and truly wave goodbye to flood cover.
“It’s going to be extremely difficult in those areas to get cover,” says Brian McNelis, director of general services at the Irish Brokers Association.
However, while you may not be able to get flood cover, you might be able to get regular home insurance cover – with flood risk excluded.
“If you stay with your existing company, they will provide home insurance without flood cover. But if you go to a new player it could be extremely difficult to get,” advises McNelis.
Of course this approach has its own perils, as you will have to pay what your insurance company charges – there will be little room for negotiation or shopping around.
And remember, if you have had an insurer withdraw flood cover from your policy, when you go to shop around for a new policy, you must tell them about this.
“You must disclose that as a material fact,” says Burke.
I haven’t been flooded but areas close to me were
Insurers typically exclude properties from home insurance based on their geocoding or flood-mapping services, which highlight areas across the State that are prone to frequent flooding. One fear is that insurers will broaden the range of properties they exclude from flood cover as a result of the recent inundations.
Allianz says it “consistently refreshes and renews” its approach to flood mapping and that recent events “will inform that ongoing review process”.
Burke’s office for example is located in Galway’s Wood Quay, near the Corrib. While the office wasn’t directly affected by the recent floods, he wonders whether it might be excluded from flood cover in future.
“They have it down to a fine art, where they’ll give cover and not,” Burke says, though he notes that some insurers might take a broader approach than others.