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Comprehensive Spending Review

Comprehensive Spending Review – more storms ahead?

Possible government spending cuts could spell trouble for homeowners with properties situated in flood risk areas. As part of the Comprehensive Spending Review, the government may consider cutting investment in flood defences.

The Environment Agency has called for flood defence spending to be doubled over the next 25 years due to the increased risk caused by climate change. However, the cash-strapped government is expected to make budget cuts wherever possible – leading to fears that flood defences may suffer severely.

Any cuts now in the spending on protecting flood prone areas in the UK could see hundreds of thousands of homes becoming uninsurable. Millions of people could then be at the risk of inundation from overflowing rivers, coasts and estuaries during extremes of weather – and this risk is increasing all the time. Spending on flood defences, and on the support of local authorities in respect of this should surely increase, not be cut.

The consequences of a property becoming uninsurable are that neither the owners, nor any potential buyers, will be able to take out a mortgage on it.

Fortunately, homeowners who live in flood-prone areas are currently protected by an agreement between the Association of British Insurers and the government. Called the Statement of Principles it guarantees that insurers will continue to offer cover for their homes, despite the flood claims. However, this agreement is dependent upon continuing investment in flood defence measures by the government. If the result is that spending cuts do hit flood defence provision, the agreement may then become null and void. So, if the level of spending currently applied is not at least maintained, it will compromise the Statement of Principles – which could see many homes becoming uninsurable.

This could have a great impact on insurance in general. If investment – and that includes the maintenance of storm drains and the arrangements for removing surface water – drops, insurers will become increasing fussy about who they insure, and this will inevitably lead to a rise in premiums.

Before purchasing a property, check whether or not it is in high risk flood area. Your insurance company can help you identify problems. Get the very best advice – contact Westhill Insurance Services and talk to them if you have any concerns about the risk of flooding for your property – or one you wish to purchase.

By talking to experts you can mitigate the risk, and with the current debates surrounding the Comprehensive Spending Review, it is vital to get good, strong advice – to help you weather the storms ahead.


Contact Westhill Insurance Services, today.

Posted on 7th October, 2010