The current Statement of Principles, an arrangement between the Government and the Association of British Insurers, which sets out the provision of flood risk insurance in England and Wales is due to expire on the 30th June 2013.
Unless the Government and the ABI can reach an agreement, property owners could be left unable to indemnify against flooding from this summer if insurers are unwilling to offer policies that expire after the principle agreement runs out, report Goldsmith Williams.
Lack of cover could leave property owners in breach of their mortgage contracts, while access to finance is likely to suffer as concerns grow about underwriting mortgage applications in high-risk areas.
Of the 165 recommendations put forward in Sir Michael Pitt’s report:
“Learning from the 2007 Floods”, perhaps the most significant was the suggestion that flood searches should be compulsory in property transactions.
This view is supported by the CML Handbook which states that in addition to the usual searches and enquiries carried out to a property, it is necessary to “ensure that any other searches which may be appropriate to the property, taking into account its locality and other features, are carried out”.
This is particularly relevant given the imminent expiry of the Statement. Both introducers and conveyancers have a duty to protect their clients and, therefore, need to pay more attention to potential flood risks. Recommending specific searches are carried out should be a priority so that clients, and lenders, are fully informed of the facts before a decision to buy – or lend – takes place. Failure to do so could leave you in hot water if it is viewed your actions amount to professional negligence.
