Flooding sparks huge increase in applications for home insurance - while premiums stay down.

There has been a surge of interest in home insurance after the recent downpours and flooding.

Thousands of homeowners in some of the UK’s worst-affected flood areas are applying for home insurance for the first time in the wake of the catastrophic rainfall.

Immediately after the flooding, applications from residents in Sheffield, Doncaster, Hull, the West Midlands and parts of Scotland leapt by up to 300 per cent in June compared with the previous month, according to Peopleschampion.com.

Jim Spowart, the chairman of Peopleschampion.com, says: “It isn’t really a surprise that there has been an increase in the number of people applying from areas affected by heavy rain. Homeowners who narrowly escaped the floods this time have realised that without any insurance cover they could be left footing bills for tens of thousands of pounds in the future. Annual home and contents insurance on typical homes in areas such as Doncaster, Sheffield, and Edgbaston can be as little as £101 to £117.”

Buildings and Contents Insurance

Annual cost to cover a three-bedroom terrace with £35,000 contents:

The surge in applications comes amid reports that insurers are considering the possibility of blacklisting up to one million homes built on flood plains. According to the Environment Agency, about 2.3 million homes are built on flood plains. With 40 per cent of property owners in the UK electing not to have home insurance, there may well be over 900,000 homes on flood plains without cover at the moment.

Jim Spowart adds: “For now, insurers say they will still abide by the terms of a deal they reached with the government in 2002. This states that insurers will continue to offer cover for those already insured and take on new business where defences are in place or planned.

“At present, the evidence suggests premiums have not yet risen in the aftermath of the floods. In an attempt to maintain market share, insurers may well absorb much of the claim costs from reserves. However, if the government ever reneges on its part of the deal to build more flood defences, then cover may either be withdrawn or premiums spiral to as much as ten times current costs.

“I would strongly urge any homeowners whose properties are on flood plains to buy good-quality home insurance immediately. Doing so ensures they will continue to be covered regardless of what happens in the future.”

Peopleschampion.com saw increases in home insurance applications across the board and of over 300 per cent in HU2 (Hull) and S1 (Sheffield) in June 2007 compared with May.

Postcodes used for quotes in the tables are DN7 6RS (Doncaster), B15 3TQ (Edgbaston) and S1 2HJ (Sheffield).

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