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Will your household insurance cover you for flood damage?

The floods of last year left many farmers with hefty clean-up bills and many looking to insurance to cover the costs. Farmers Guardian examines the insurance pitfalls awaiting many and what can be done to avoid them.
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The December floods and storms led to 2,747 NFU Mutual claims at a total cost of £58.2 million
The December floods and storms led to 2,747 NFU Mutual claims at a total cost of £58.2 million

One-fifth of household insurance claims are rejected, according to recent figures revealed by the Association of British Insurers (ABI).


Given the recent stormy weather this could be of considerable concern to farmers who may have suffered flood and wind damage.


So how can you make sure your insurance will pay out when it matters?


According to the ABI report, the main reasons for a claim failing are wear and tear or damage caused by a lack of maintenance; the claim value being below the policy excess; and not having bought the right cover.


Given farmhouses are often older buildings with extensive outbuildings, it is very common farmers fail to purchase sufficient cover, said Tim Price, spokesman for NFU Mutual.


“Three-quarters of the private homes our valuations partner assessed in 2015 were under-insured,” he warned. “In these circumstances, homeowners may find themselves in financial difficulty in the event of a major fire or severe flood, as their insurance policy may pay out only a proportion of the cost to re-build the property.”


The December floods and storms led to 2,747 NFU Mutual claims at a total cost of £53.2m, said Mr Price.

 

Storm claims


“As a rough guide, an average storm claim is about £10,000, and an average flood claim about £20,000,” he said.


Of course, some claims are considerably higher than that, so it is important to get it right as the losses could be considerable.


“When you are taking out building insurance for your home, it is important the property value accurately reflects the cost of rebuilding from scratch and not its market value,” said Mr Price.


It is the same concept with home contents cover – it should include the full replacement cost of electrical goods, furniture and furnishings, including those which have been inherited.

 

Valuable items


“Take pictures of your most valuable items, especially any serial numbers or maker’s signatures, to help with identifying items for valuation purposes, or should they be stolen and then recovered later.”


In some cases the insurer will reduce the payout by the percentage that a house and contents are under-insured – so if they are only insured for 70 per cent of the total value then any claim will be reduced to 70 per cent of its full amount. It is therefore important to check the wording of any policy before taking it out.

 

Be honest and open


In the event of a claim, it is important to be honest and open with the insurance firm.

 

Report any thefts to the police, as failure to do so will mean items will never be returned should they be recovered. In the case of flood or storm damage, keep people and stock safe by turning off electricity or gas supplies and avoid contaminated water or dangerous debris.


“And it is worth gathering evidence of your accounts so your insurer can make progress with interim payments to keep your cash flow going," added Mr Price.


If business interruption cover is included, this can help with paying salaries while the business is out of action, recovering loss of profits and increased costs of working.

 


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CLA urges MPs to support new flood management scheme CLA urges MPs to support new flood management scheme
Defra in firing line over flood aid delays Defra in firing line over flood aid delays
Eustice urges flood-hit farmers to apply for recovery funding Eustice urges flood-hit farmers to apply for recovery funding
Farmers - here's how to make sure you have the insurance you need... Farmers - here's how to make sure you have the insurance you need...

10 signs you could be under-insured

  • The insurance value is based on a mortgage valuation
  • The property is listed or in a Conservation Area
  • The building is made from stone or unusual materials
  • The property has extensive outbuildings – garages, barns, driveways, tennis courts and swimming pools need to be included in the insurance valuation
  • The building was built before 1920 – older buildings cost more to rebuild
  • The property has recently been extended, altered or refurbished
  • The building has never had a proper valuation
  • The building is ‘green’ or ‘high tech’
  • Difficult access increases delivery and storage costs
  • The insurance valuation is based on a percentage of the market value
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