Many home insurance policies may not include enough cover for those who are forced out of their homes by flooding, new analysis of the home insurance market by experts at Defaqto has found.
For those who are unlucky enough to have their homes flooded, not only will they have to repair and replace many of their belongings, but they are also likely to have to live somewhere else while their home is dried out.
A seriously flooded house can take up to a year or more to put right, while it’s not unheard of for victims to be out of their homes for as long as 18 months to two years.
The problem is likely to be made even worse by the shortage of available builders in the current labour market, as well as a shortage of building supplies.
Depending on the property and local rental market, some insurance policies might not provide enough cover to pay for the total cost of alternative accommodation, leaving victims well out of pocket and facing financial hardship.
Defaqto has found that some policies offer as little as £15,000 for all costs, with almost one in four offering less than £40,000.
While this might sound a lot, in parts of the country this could easily be used up in an extended repair process. A small number of policies even provide cover for less than 6 months of temporary accommodation.
The lack of private rental properties has seen rents soar in many parts of the country and cover for accommodation has not kept pace with this.
Estate agents report that rents in Manchester have increased by 25.5% since 2021, 25.4% in London and 14% in Edinburgh, cover for alternative accommodation has in some cases hardly increased at all over the same period.
Buildings Insurance Policy Cover for Alternative Accommodation:
| Cover for Alternative Accommodation | No. of Policies | % of Policies |
| Less than £20,000 | 17 | 6% |
| £20-£39,000 | 65 | 21% |
| £40-£60,000 | 73 | 24% |
| £75,000-£99,000 | 26 | 8% |
| £100,000 or more | 126 | 41% |
| All Buildings Policies | 307 | 100% |
Brian Brown, consumer finance expert at Defaqto, said: “While there are obvious things people can do to protect their homes against flood damage, including very carefully choosing the place to live, climate change is making a mockery of even those decisions as we experience flooding in areas which were previously thought to be safe.
“If you are unlucky enough to have your house damaged by storms and flooding, home buildings and contents insurance is intended to pay for any damage, provided you have cover. Buyers should beware of the insurance small print and check their cover.
“Many people underestimate just how much those costs might be and are caught out. Many policies have not increased their limits in line with the current rental market and homeowners could be caught out if they have to be out of their property for an extended period for repairs.”
