Changing flood risks are placing pressure on infrastructure, insurance markets and the resilience of your residential property business.
Some properties once considered low-risk are now vulnerable to floods, tightening the availability of affordable flood insurance. Properties located in flood-prone zones are considered higher risk by insurers, often leading to increased premiums or very limited coverage availability.
However, by investing in mitigation measures and staying informed on specialist insurance product developments, your residential property business can overcome flood insurance challenges and protect your assets against rising flood risks.
In this insight, we look at what’s driving flood risk insurance trends and the steps your residential property business can take to secure cover at an appropriate cost.
There are several issues behind why your residential property business may struggle to access insurance against floods. These include rising river levels, coastal erosion, overwhelmed drainage systems and flash flooding caused by extreme weather events, which are all contributing to a higher frequency and severity of flood-related damage across the UK.
Surface water flooding is a major concern in densely populated urban areas, occurring when rainfall overwhelms drainage systems, leading to water pooling on the surface.
Several factors are contributing to increased surface water flooding, including urbanisation, climate change, aging infrastructure and the loss of natural flood defenses. Reduced wetlands and other natural water-absorbing features can increase surface runoff, while urban developments without adequate drainage solutions can contribute to local flooding risks.
More frequent and intense rainfall can overwhelm drainage systems both in urban and rural areas, exacerbating flooding risks. Many drainage networks built decades ago aren't equipped to handle current rainfall levels and the associated accumulation of debris.
Despite initiatives such as Flood Re, a UK government-backed reinsurance scheme designed to make flood insurance more affordable and accessible for homeowners in high-risk flood areas, residential property business owners may still find it difficult to insure against floods. Not all properties qualify for participation in Flood Re. For example, homes built after January 2009 are excluded.
More broadly, we’re seeing many insurers reassess their flood damage excesses, applying higher excesses more frequently. If one of your properties suffers flood damage, you could be liable for significant out-of-pocket expenses before your insurance applies. This is particularly the case for many basement properties, where higher excesses are likely to be applied as standard.
You may want to look at specialist flood products such as excess infill cover, which fills in the gap between your insurer’s flood excess. If your main property owners’ policy has a £20,000 flood damage excess, the infill policy would reimburse some of or all that amount, depending on the terms.
There's also the option to purchase standalone flood limits where your insurer may exclude flood or limit your flood cover. However, market capacity for this remains limited. There are currently only a small number of markets and managing general agents (MGAs) actively participating in flood risk insurance for residential property businesses. So, while flood excess infill products and the option to buy standalone flood insurance limits are available, overall market capacity remains constrained.
By being able to carefully evaluate policy structures, routinely reassess property-specific flood risk and proactively engage your broker with targeted questions, can help strengthen your flood insurance strategy.
Ask about key policy terms and available flood cover options, such as:
These questions can help you secure more effective protection and avoid being caught off-guard by exclusions, high excesses or limited flood risk coverage.
To obtain affordable flood risk cover for your residential property business, you need to demonstrate what flood risk mitigation measures are in place to insurers. Such mitigations can include flood defenses, on top of regular maintenance of your gutters, downpipes and nearby drains to prevent blockages.
Opting for tile flooring, water-resistant insulation and raised appliances in your properties can help mitigate losses from floods, as can raising electrical systems above levels more likely to be impacted by floods.
Installing sump pumps helps manage surface water and groundwater intrusion by pumping water away from your property to a designated drainage area, reducing the risk of mould, mildew and structural damage. This can make your risk more attractive to insurers.
For specialist support to boost your residential properties’ flood resilience and insurance, get in touch.
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