Biblical floods may have destroyed the contents of your home — will insurers now try to pull a fast one, asks Louise McBride
THE devastation that swept the country over the last few weeks as floods wreaked havoc with homes and businesses could be only just beginning.
Just like August 2008, much of the flooding of the last three weeks occurred in areas never before considered at risk of floods. If you’re a flood victim whose home has never previously been flooded, your insurer will usually cover the five-figure bill you may be facing for damage. But if your flood is the first of many, you may have no choice but to foot the huge bill for future flood damage yourself — something which many homeowners in flood-prone areas like Clonmel, Co Tipperary, and Fermoy, Co Cork, had to accept a long time ago.
Insurers usually shun homeowners who live in areas ravaged by floods. Some brokers say the average claim being made by victims of the recent floods in Cork is €15,000 to €20,000 — with the average business claim running to €50,000-plus. With claims like that, losing insurance cover for flood damage is a blow to any homeowner — particularly if they don’t qualify for humanitarian assistance.
So if your home has been flooded for the first time, will you have to battle to get your insurer to cover you for flood damage going forward?
HOME DAMAGED IN A FLASH FLOOD
If you’re among those who made a claim after your home was damaged in the flash floods at Passage West and Crosshaven,Co Cork, earlier this month, or in last June’s flash flood in Gweedore, Co Donegal, don’t write off your future insurance cover just yet.
“Insurers may treat victims of flash floods differently to those living in pure flood areas,” says Brian McNelis, director with theIrish Brokers Association. “Your insurer may be amenable to renewing your flood cover if for example the flood has only occurred in the area once in the last 80 years, or if you’ve put preventative measures in place to protect from future floods.”
Insurance company Allianz said that it would usually continue to cover a customer who had made a claim for flood damage if “the flood is a random or ‘once in a lifetime’ occurrence caused perhaps by a severe weather event or an avoidable occurrence such as a temporary blockage in a runoff water system. Insurance in such cases covers what is an ‘unpredictable event’ or a ‘risk'”, said a spokesman.
Even so, if you’ve made a hefty claim after a flash flood, the cost of your house insurance may go up when you renew it, particularly if you had built up a no-claims bonus before then. Your insurer may also insist that your policy carries a higher excess — the first part of a claim you pay for yourself — than previously.
“If you had a no-claims bonus, your premium could be 30 to 40 per cent higher on renewal than it was before,” says Paul Kavanagh, managing director of Cork insurance brokerMcCarthy Insurance Group. “Or the excess for your flood cover could be increased from €250 to €1,000 or €2,000.”
Some insurers will increase your excess for flood cover by up to €5,000 after a claim.
Not all insurers get rid of your no-claims discount if you make a claim. Quinn Direct customers who lodged claims for the latest flood damage between November 19 and November 24 will not lose their no-claims discount, according to the insurer.
LIVING IN A KNOWN FLOOD-PRONE AREA
If you live in an area of the country with a history of flood problems, and you have been with the same insurer for a number of years, you may still be able to claim for damage caused by the recent floods.
“There are a number of people who still have flood cover in Fermoy and other flood-prone areas as they have never claimed over the years,” says Kavanagh.
“In previous floods, these people may have only had two to three inches of water in their home so they may have decided to hold their claim until there was more serious damage.”
If you’re one of these people you may still be able to get your insurer to cover a claim for the latest flood damage, but the chances of continuing your cover going forward will be slim.
“The problem in the past is that some people would have made a small claim for flood damage,” adds Kavanagh.
“Or they may have switched to a new insurer who refused to cover them for flood damage.”
If you’re one of these people and living in a flood-prone area, you’re likely to have to foot the bill yourself. If you own a home in a flood-risk area and you’ve been with the same insurer for a number of years, be careful about switching to a new insurer. While your existing insurer may still cover you for flood damage, your new insurer is unlikely to do so.
If you’ve just bought a house in a flood-prone area and are buying house insurance for that property for the first time, don’t bet on getting flood cover.
“Homes in pure flood areas are uninsurable for damage — you simply won’t get cover,” says McNelis.
A spokesman for FBD agrees. “As a general rule, we do not provide flood cover for properties in areas which have been prone to flooding.”
LIVING IN AN AREA THAT HAS JUST BECOME FLOOD PRONE
There is usually a blacklist of flood spots that insurers avoid — and with the latest spate of flooding, that list is about to get longer.
“We have over 300 individual street/location areas across all counties which have flooded previously,” says a spokesman for AXA.
“We do not have a blanket ban on towns or areas. Each risk is assessed individually, based on our previous experience. Following the current spate of flooding, we may have to increase this list as new areas flood which never flooded before.”
Even if you live in a flood-prone area and your house has never been flooded, your insurance could soar when you renew it. For example, AXA quoted €463 to insure a three-bedroom semi-detached house in Clara, Co Offaly. The house in this case had a rebuilding cost of €170,000, contents worth €60,000, and was not located in an area prone to flooding. Were the area to become prone to flooding, that premium would rise to €545 — even if the house itself was unlikely to flood and the homeowner never made a claim.
If the area you live in has only just become flood-prone and you had flood cover before the latest floods, you should be able to claim for the latest damage — and your insurer may continue to cover you going forward, albeit at a price. If, however, your claim for flood damage is a hefty one, you may have difficulty renewing your cover.
“Existing Allianz customers with full flood cover will retain that cover, even if it comes to light that the area in which they are living is now prone to flooding,” says a spokesman for the insurer.
He adds that Allianz has “several customers” who continued to be covered for flood damage after making flood claims.
“However, we retain the right to continuously review their policies with us,” he says. “In some cases, we may impose increased excesses for flood damage or we may exclude flood cover from their policies — but only after significant payments have been made and there is a high level of certainty that flooding will reoccur.”
LIVING IN AN AREA THAT HAS PUT FLOOD DEFENCES IN PLACE
If you live in an area that has long been ravaged by floods, but flood prevention measures have been put in place, you may be able to get flood cover — even if you’ve been refused cover by your insurer for the last few years.
“In places like Mallow in Cork, the flood defences seem to be working,” says Kavanagh. “So there will be a greater probability of getting flood cover for Mallow in the future.”
If you run your own company and are in a flood-prone area, it is in your interests to put your own flood prevention measures in place. By doing so, you could continue to get flood cover from your insurer.
“When negotiating for insurance cover, businesses should be showing that loss prevention precautions being taken are those that would have been taken had there been no insurance cover,” says Susan Somerville, director of Richardson Insurance Solutions. “In areas where there has been a history of flood damage, business owners should take all practical steps to manage the risk, such as storing stock above floor level or installing automatic pumping facilities.”
HOLIDAY HOME DAMAGED BY FLOOD
Even if your holiday home is covered for flood damage, if it was unoccupied at the time of the flood and you didn’t agree this with your insurer in advance, get ready to cough up. Insurers usually won’t cover a holiday home for flood damage if it is unoccupied for a certain period.