Flood Insurance – what is Flood Re?

4 minutes

If you live in an area prone to floods it will inevitably have an impact on your home insurance and you may find it more challenging to get insurance. Our insurers have access to Flood Re, a government-backed scheme established to help those in high-risk flood areas obtain home insurance. But what is Flood Re and how do you know if you’re eligible? Here, Private Client Manager Abbie Mason lets us know.

What is Flood Re?

Flood Re is a joint initiative between the Government and insurers. It is a re-insurance scheme designed to make flood cover more accessible to people who live in an area with a history of flooding and for those whose homes are considered to be at risk of flooding.

How does Flood Re work?

When you buy home insurance, the insurer can choose to pass the flood risk element to Flood Re for a fixed cost. This is typically called ‘ceding to Flood Re’. If you then make a valid claim for flooding, your insurer will pay the claim and then Flood Re will later reimburse them.

Who pays for Flood Re?

Most of the costs are covered by the home insurance industry through a levy. Flood Re collects an annual amount from every insurer offering home insurance in the UK. This provides Flood Re with £135m every year. This is used to reimburse insurers for claims paid due to flooding, and pay for the day-to-day running of Flood Re.

Am I eligible for Flood Re?

An insurer can only cede to Flood Re if a property meets all of the following criteria:

  1. They are covered by an insurance contract which is held in the name of, or on trust for, one or more individuals or by the personal representative of an individual
  2. The holder of the policy, or their immediate family, must live in the property for some or all of the time (whether or not with others) or the property must be unoccupied
  3. They have a domestic Council Tax band A to H (or equivalent)
  4. They are used for private, residential purposes
  5. They are a single residential unit or a building comprising of two or three residential units
  6. They are insured on an individual basis or have an individual premium
  7. They were built before 1st January 2009 (if a home is built before 1st January 2009 but then demolished and rebuilt, the new home is still eligible)
  8. They are located within the UK comprising England, Wales, Scotland and Northern Ireland (excluding the Isle of Man and the Channel Islands).

The following properties may be eligible for buildings or combined cover provided they also meet all of the above criteria:

  • Bed and breakfast premises paying Council Tax and insured under a home insurance contract
  • Farmhouse dwellings and cottages. Where farmhouse dwellings are included in a commercial line policy, provided the insurer can split out the dwelling element (which meets the criteria 1-8 (inclusive) above), that part of the risk can be ceded to Flood Re
  • Holiday/second homes
  • Properties occupied by home workers
  • Individual leaseholders protecting their own property/flat
  • Leasehold blocks if they contain 3 units or fewer and the freeholder(s) lives in one of the units to be insured
  • Single unit leasehold properties where the leaseholder insures the structure of the property
  • Residential ‘buy to let’ properties
  • Static caravans/homes if in personal ownership.

In addition, Flood Re will provide cover for contents in rented or leasehold properties, even if the building is not eligible, such as large blocks of flats, provided the policy and property it relates to fulfil the criteria 1-8 above.

The following properties are not eligible for Flood Re:

  • Bed and breakfast premises paying business rates
  • Blocks of more than three residential flats
  • Company houses/flats
  • Properties covered by contingent buildings policies (e.g. held by banks)
  • Farm outbuildings
  • Properties used by freeholders/leaseholders in deriving commercial income insuring blocks/large numbers of properties in a portfolio
  • Housing association’s residential properties
  • Multi-use properties under commercial or private ownership
  • Residential ‘buy to let’ (which do not meet the criteria 1-8 (inclusive) above)
  • Social housing properties (these are eligible for Contents cover but not eligible for Buildings cover)
  • Static caravan site owners (for commercial gain).

For more details you can visit the Flood Re website

How much does Flood Re cost?

When a risk is accepted, Flood Re charges the insurer a fixed premium, based on your home’s council tax band. This is then added to the home insurance premium. The price, excess and terms for policies are set by the insurer, not Flood Re.

How can I buy Flood Re?

Flood Re cannot be purchased as a stand-alone product and may only be available with selected home insurance policies.

If my insurer cedes to Flood Re, what is covered?

Flood insurance is more than insuring the buildings and the contents. There are other areas of cover to consider and not all policies are the same.

What should I do if I need Flood Insurance?

We recommend you speak to a specialist broker like Howden.  We’ll negotiate with insurers to find you the right flood insurance policy.