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What Does Extreme Weather Mean for your Home Insurance?

Lost among the latest barrage of national and international news events is the ongoing nightmare faced by almost 600 households unable to return to their homes in Lincolnshire because of flooding.

A few weeks ago the River Steeping burst its banks following heavy rains. More than 580 homes in the Wainfleet area were evacuated, with flooding directly affecting around 130 homes and 1,000 people still unable to return.

It’s the latest case of extreme weather to hit the UK. Extreme meteorological events can be deeply upsetting for the people directly affected and seriously unnerving for everyone else.

However they are increasingly regular and the financial impact will affect all of us in the short-term as well as the long. The trend is already costing insurers.

The Association of British Insurers (ABI) reports that the extreme freeze that hit the UK early in 2018 resulted in insurers paying a record £194million in a three-month period for burst pipes. Then 2018’s extreme heatwave led to more than 10,000 households needing to claim for damage caused by subsidence, at a cost of more than £64million.

“With the risk of flooding increasing, then the only sustainable option insurers have is to adjust their risk prices accordingly,” warns Samuel Leach, director of Samuel and Co Trading.

“In the long run the knock-on effects from rising premiums could pose a threat that could become a social issue, as affordability is so critical for some people on low and average incomes.

“In general, you can’t prove that a single event is the result of climate change but it is likely to cause more such events of greater severity. If insurers conclude that climate change was a significant contributory factor to the event, companies will start thinking carefully about the pricing and availability of similar insurance policies.”

Summer rain

Strangely, the warmer months can cause flooding risks. Jessica Turner, catastrophe advisory senior vice president at Guy Carpenter, explains: “The warmer months tend to be more prone to flash flooding as the land surface heats up during the day, causing powerful updrafts and sometimes convective storms.

“These storms can lead to large bursts of rain falling within short periods of time and in localised areas. Climate change and an increase in urban development can contribute to the threat of surface water flooding.

Older drainage systems, some of which were originally installed in the 1800s, are often not updated and can be overwhelmed by the increase in rainfall on paved surfaces, which can’t absorb water.”

Increased risk makes it even more essential that householders ensure they have sufficient protection in place.

“It is really important that people check that they are adequately covered for major repair and rebuilding costs should their property be affected by extreme weather,” Jason Smith, CEO of MoneyExpert, says.

“People need to fully cost up the value of the contents in their property so they can be replaced in the event of them being destroyed, or damaged, beyond use in the event of a major fire or flood.

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