Up to 200,000 homes could struggle to get insurance against flooding next year, potentially risking an £11 billion liability, council leaders have said.

The Local Government Association (LGA) has written to the Government and the insurance industry urging a replacement for a "safety net" for flood-risk areas which is due to expire.

The Flood Insurance Statement of Principles was agreed in 2008 and is due to expire in June 2013. It commits insurers to continue to offer insurance to existing customers where they are at significant risk, if there are plans in place to reduce that risk within five years.

People in areas including Nottinghamshire, Worcestershire, Devon, Kent and Huddersfield have been refused or priced out of home insurance because of flood risk. With the safety net expiring, the LGA said people are already finding it difficult to get insurance.

Clare Whelan, from the LGA's environment and housing board, said: "Councils are the organisations to which people turn for help in their hour of need.

"However, we simply cannot afford to take the risk of being left to foot a multibillion-pound bill if we see more devastating scenes like those in Cockermouth three years ago. The insurance industry has a responsibility to help people manage risk and should not be allowed to hand pick low-risk homes while leaving those most in need high and dry.

"We all remember the wave of destruction the 2007 floods caused. It is imperative the insurance industry commits as soon as possible to providing affordable and fair insurance premiums once the current safety net agreement expires next year.

"Some families are already struggling to find cover for their homes, and we run the risk that tens of thousands more could soon face a double whammy of greater risk of flooding while being left unable to get insurance."

Nick Starling, director of general insurance at the Association of British Insurers, said: "Insurers are determined that flood insurance continues to remain as widely available and competitively priced as possible to those at flood risk. Insurers do not want to see people priced out of home insurance and have stood by their high flood risk customers under the Statement of Principles agreement for over 12 years.

"We now urgently need the Government to work with us to ensure that a sustainable flood insurance market is in place once the agreement ends in June next year."