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Insurance and flooding

Flooding is something I’ve already written about but it seemed important to think about the insurance implications relating to old buildings. In this Q & A I’ve asked Amanda Harman, who works as senior client manager of High Value Households at Aon Private Clients, for her views:

What are the particular insurance issues relating to flooding and listed homes?

The materials which listed properties are constructed from can potentially represent a higher risk in the event of flooding. Therefore it is important that specialist craftsmen are used to replace and repair the damaged materials; due to the niche skills and knowledge that the specialist workmen have they are often more expensive than standard workmen. Materials used in listed properties are often more expensive to replace which can lead to an increase in the potential claim amount. It is also crucial to have a quick response to flooding to help minimise the risk of secondary damage by water soaking into the fabric of the walls.

Are there steps that owners can take to make their homes more insurable if they are in a flood risk area?

If homeowners have property in a flood risk area they should look into flood resistance and flood resilience methods to help protect their home by reducing the risk of flood. If they choose to use one of these methods it can make the risk more attractive to underwriters leading them to insure the property with fewer terms. For example, installation of ‘alternative’ systems to help prevent flooding, such as a modified ‘ha-ha’ or ‘flood doors’, can help protect the property.

After a flood, will insurance companies pay for preventative measures to lessen the danger of future flooding? 

No, this would be down to the client and/or the local authorities. The purpose of the insurance policy is to indemnify the policyholder, which helps them get back to the same position they were in prior to the loss, not to improve their initial risk. However, in some circumstances, consideration may be given to remedial works incorporating an element of ‘betterment’ if this will improve the risk for the future. It is usually less costly to incorporate these works whilst other works are being undertaken. Each case would be taken on its merits and it is likely that, if betterment is agreed, only a contribution towards the improvement will be offered. When repairs are being carried out, some measures can be incorporated e.g. moving electrical points above likely flood level, in order to help minimise damage of a future flood loss.

What about insuring the contents – especially where it is high value such as antique paintings and furniture – in terms of flooding?

Contents would form part of a claim with the relevant insurer (the contents may be insured with a different insurer to the policy for the house). It would be expected that the client does all they can to protect pieces which are easily moved and that, for the future, items of particular value or importance are not kept in a flood prone area (such as a basement) without remedial actions being taken to protect them.

From an insurance perspective, how much importance is attached to good maintenance and the use of appropriate materials such as lime mortars, renders and plaster in old buildings?

The state of the property’s maintenance could impact the level of damage and cost of the claim, therefore there is a lot of importance attached to good maintenance. Cover is subject to the property being in a good state of repair and it is assumed the property will remain this way throughout the policy period. If a survey identifies any issues in respect of maintenance or materials, these would be discussed with the client or his agent and would need to be rectified or would be subject to terms. If a flood loss was caused or maximised through lack of good maintenance, when the property was deemed in a good state of repair or if the appropriate materials haven’t been used and, again, can be proved as a reason for the extent of the flood damage, the amount which is paid for the claim may be affected. In general, we would expect good maintenance of the property to be a matter of course and we would expect remediation to be completed in the appropriate materials in line with the listing or features of the property.

Following a flood, what role can an insurance company play in ensuring appropriate techniques, materials and craftspeople are used when repairing an old building?

To ensure the appropriate techniques, materials and craftsmen are used when repairing an old building and that action is taken in a timely manner, insurers would look to use an adjuster and contractors with experience and knowledge of old, listed or important buildings, as these require expertise. Alongside this, the client manager will liaise between parties if necessary and ensure the client understands the process and feels comfortable with the adjusters and contractors and is able to ask questions if necessary.

All answers take the assumption that the buildings and contents are insured at the correct and sufficient level.

this post was written in partnership with Aon

Image credit: ©Jo Hughes