Victims of Recent Downpours Facing Spiralling Excesses

Reports in both the Guardian and on the BBC News website are highlighting the rising costs of insurance premiums for those that have been hit hard by the recent flooding in areas such as Cumbria.

The North West County has been amongst numerous places across the United Kingdom to suffer at the hands of intense flooding and insurance providers have used it as a reason to express the need for adequate cover in such conditions.

However, despite home owners carrying out various tasks to protect their home, as well as doing their best to minimise the damage by moving possessions to higher levels, insurance companies are cited to be rarely helping them.

As a result, despite their best efforts, there are homes that are becoming virtually worthless and impossible to sell on because of the insurance excesses caused by flooding.

As a result the National Flood Forum, a charity that provides advice and support to people who are victims of flooding, is urging insurance companies to change its attitude towards flood victims and protection measures that are in place.

They feel that it is unfair that despite work to protect the home, some of which can stretch into tens of thousands of pounds, high insurance premiums and excesses are still being applied to properties.

The Guardian newspaper has spoken to various people that have succumbed to flooding, citing insurance figures that have more than doubled since 2008. They refer to AXA, who have since imposed a maximum limit for flood excesses of £10,000.

The insurance industry has insisted that they do not increase the flood excess on the majority of properties. A press release from MoneySupermarket.com earlier in November pointed out that insurance providers have improved their handling of flooding in recent years and home owners should still ensure they are taking preventative measures to minimise damage.

Earlier in the month, the BBC also pointed out that the government and the insurance industry had agreed that the providers would continue to insure homes that are at risk of flooding, with the real difficulty being the switch to another provider in the future.

Sources: Guardian.co.uk, BBC News and MoneySupermarket.com Press Release

Reports on the Weather Issues Facing the UK

Each year the UK faces extreme weather conditions that often lead to flooding and gale force winds and as Cumbria struggles to get back to its feet following the horrendous flooding it has seen over the last couple of weeks, MoneySupermaket.com and the BBC refer to insurance premiums during this time.

Flooding can cause considerable damage to the home; this much is a given, but both sources give indications as to the habits of insurers and those who have suffered at the hands of flooding and other weather-related damage.

In light of the recent floods in Cumbria, Dumfries and Galloway, Julie Owens of MoneySupermarket.com highlights the need for Home Insurance: “Unfortunately this sort of event serves as a reminder to those living in flood risk areas to make sure they are prepared for these eventualities and making sure they are fully insured is paramount.

“People living in ‘at risk’ areas should check the details of what their buildings and contents policies cover, as well as the limits and excesses on both. It pays to make sure that the quality of your insurance is high and you won’t be left out of pocket if you have to make a claim.”

She highlights that in recent years, insurance providers have improved the way in which they handle large scale flooding incidents like this. However, home owners, who may have to make claims on both contents and building insurance, should take extra steps to minimise damage, such as moving valuables upstairs and tying down garden appliances that could cause damage to the house.

“Your insurer will expect you to make attempts to minimise your claim”, she adds.

The BBC refers to a deal that was agreed upon between the government and the insurance industry that means that insurers will continue to insure homes at risk of flood. However, the real difficulty in this situation may be switching to a new insurance provider.

The average costs of flood damage to the home each year amounts from £20,000 to £40,000 according to the ABI, with these figures expected to rise with global temperatures. In the current situation in Cumbria, Dumfries and Galloway, the claims could exceed £100 million in total.

Source: MoneySupermarket.com Press Release Nov 2009 and BBC News

Only a 2.6% Rise Since 2007

Home owners going without home insurance to cut the costs of everyday life could breathe a sigh of relief this year as Sainsbury’s Finance releases figures showing only a small rise in the cost of running the average house since 2007.

The cost of running the household can hit unwanted highs and coupled with the ongoing recession it has meant that some people are cutting back on items such as home insurance. However, industry figures warn that such action could end up costing people more in the long run.

Sainsbury’s Home Insurance reveals that the average cost of running the home is around £11,455 annually according to sources such as the Office of National Statistics. This is around £220 a week and a rise of only 2.60% since 2007. Sainsbury’s cites the reduction of mortgage payments as the reason for the lower rise as other areas of the house have actually risen in costs.

One area that has risen is the cost of gas bills in the UK, which have risen on average by around 26.68% since 2007 from £651 to £812 (estimated), with electricity at £14.69%. This is according to figures from Ofgem.

So home owners should think twice about cancelling or failing to take out insurance policies, with a range of risks still facing the average home. Sainsbury’s has recently highlighted the reduction of home insurance claims in 2009, which compared against the increase in burglaries suggests a reduction in the number of people with home insurance. The insurer estimates that 946,000 people have cancelled or reduced their home insurance cover from 2008 to 2009, with 700,000 citing their financial situation.

“We spend thousands of pounds each year running our homes and have often invested even more money on furnishings and decorating,” said Joanne Mallon, Home Insurance Manager for Sainsbury’s Finance, “Yet, so many people are putting this investment at risk by cutting back on their home insurance.

“Good quality home insurance doesn’t have to be expensive.”

As ever, customers are encouraged to shop around for the best deal they can find in home insurance (as is the case with any form of insurance). It could make the difference between no insurance and finding a policy at the right price and an adequate level of protection.

Source: Sainsbury’s Finance Press Release July 2009

A Quarter of Burglary Victims Affected

When applying a monetary figure to the consequences of suffering a burglary, the first task that might come to mind is weighing up the costs of numerous possessions, such as the television set, a DVD collection or other items around the house.

However, if recent figures are to be taken into account then home owners should take other costs into account – those associated with identity theft.

According to LV, the Liverpool Victoria Friendly Society, around a quarter of those that have suffered a burglary in recent times have also succumbed to ID theft, with the average cost of solving the problem amounting to £2,150.

As a result, the Friendly Society, which provides home insurance and other policies, has offered help to those that are covered by its home insurance policy. Those with LV’s home insurance will now be able to access an identity fraud helpline, which is free of charge.

LV= points out that when burglars enter a home, it can often be too easy for them to find  personal documents as the majority of home owners keep them in the same place. They quote an anonymous fraudster that highlights the issue:

“So many people make my job really easy by sticking all the key documents together in one place. And for all the family too, so you often get three or four identities for the price of one, so to speak”

Fraudsters can easily steal a person’s identity with items such as credit cards, ID cards, National Insurance cards and statements from the bank. As a result, they are highly valued on the black market, making them prized possessions for would-be thieves.

So as well as ensuring that home owners have home insurance, it is being urged that they also have security measures in place to protect themselves. This includes ensuring that personal documents are secure and are not all located inside say, a single handbag.

The problem could be of particular concern if statistics from Sainsbury’s Finance are taken into account from November. From the beginning of April to the end of June 2009, the insurer states that 67,000 claims on home insurance were made as a result of theft.

Sources: LV= Press Release Sept 2009 and Sainsbury’s Finance Press Release Nov 2009

The Leading Home Insurer offering New Services to Student Landlords

Everyone remembers their student years, back when constant partying was only interrupted with nights out, socialising and even finding time to get some studying in. It is the time of many people’s lives that is cited as the best. But the student lifestyle is not a good thing for everyone and so far student landlords have been amongst those that might face difficulties in providing for them.

Due to the risks associated with students, landlords often find it difficult to find home insurance for their properties, leading insurance provider Aviva to step up its help for the student tenanted landlords. Aviva’s product development manager explains some of the details: “Landlords with student tenanted houses are not always easy to obtain cover for due to the type of risk. Aviva is expanding its underwriting appetite within this sub-segment to enable brokers to offer customers our Residential Property Owners product, which provides cover on an all risks basis.”

This will account for the properties typically inhabited by students in their second or third year of study (or beyond depending on the course or the location within the UK). The company will therefore offer quotes when people need them (using Fast Trade) for brokers that are attempting to find cover for student landlords.

If landlords are using Assured Shorthold or a Short Assured Tenancy Agreement then brokers that are providing insurance for them will be targeted by the new offer. It means that landlords will be able to gain cover for damage (either malicious or accidental) or rent loss.

According to Hamptons International CB Richard Ellis, the amount of students deciding to live in such accommodation is increasing regularly, with the rate of demand for student property expanding by 14% over a period of 5 years. This corresponds to figures from the Universities UK Report and HESA 2007/8 that states that 80% of students do not live at home.

Recent reports from Sainsbury’s Finance in 2009 state that around a third of students do not have their own form of home insurance that will provide cover for their personal possessions. As a result, they are particularly at risk from burglary.

Sources: Aviva Press Release Oct 2009 and Sainsbury’s Press Release Sept 2009.