Insurance warning over flooding
Hundreds of thousands of homes could become uninsurable and unmortgageable if the Government cuts spending on flood defences, it has been claimed.
AA Insurance urged the Government not to cut resources in this area in the Comprehensive Spending Review, saying the industry is instead calling for spending to be significantly increased.
Simon Douglas, director of AA Insurance, warned that any cuts to the amount of money spent protecting flood prone parts of the UK could lead to hundreds of thousands of homes becoming uninsurable, meaning people would no longer be able to get a mortgage on them.
He added that spending cuts in this area would also "inevitably" lead to higher insurance premiums for other homeowners.
In an open letter to Environment Secretary Caroline Spelman, he said: "Millions of people are at risk of inundation from overflowing rivers, coasts and estuaries during extremes of weather and that risk is increasing all the time."
Under the Statement of Principles on the Provision of Flood Insurance, which was agreed by the Association of British Insurers and the previous government, insurers have agreed to continue offering flood cover to existing customers until 2013, providing the flood risk is being adequately managed.
But Mr Douglas said: "If spending isn't maintained, it will compromise the Statement of Principles, which could see many homes become uninsurable."
He added that the Environment Agency has called for flood defence spending to be doubled during the next 25 years.
The group also warned that the cost of buildings and contents insurance policies could rise rapidly if flood protection was removed.
The cost of home insurance had remained largely static for a number of years up until mid-2009.