Tuesday, May 13, 2008

Global Warming Affects Home Insurance

Last years storms were a prime example of this. During 2007 more then 1.5 million British homes’ roofs were damaged due to high winds, which caused £4.5 billion of damage. The report undertaken by Halifax Home Insurance quoted the average cost of wind damage reached £2,800. Damaged gardens, sheds and destroyed garden furniture were all claimed on owners’ home insurance policies.

Wind damage can often lead to future costs if homeowners do not take immediate action.

Martyn Foulds, senior claims manager, said, “It is advisable for homeowners to conduct a thorough inspection from ground level following high winds, the problem could be exacerbated by water coming in through missing or broken tiles.”

Climate change will increase the number of dangerous weather conditions, and homeowners need to prepare for future storms by evaluating the existing home insurance. Even with the damaging recent storms, 36% of homes are not insured. Advice has been given for homeowners to prepare their homes by securing lawn furniture, and checking, trees, gutters, tiles and roofs. They should also ensure they are adequately insured for any foreseeable problem.

There are often long delays for insurance payoffs after major incidents, so insures are recommending having an emergency repair fund to make necessary repairs and prevent further damage whilst awaiting the insurance payout.

The Association of British Insurers (ABI) warns that if nothing is done then the current value of claims could double or even triple by the middle of the century. The ABI wants climate change to be taken into account during designs of flood defences, and for building regulations to be changed so properties are more resistant to extreme weather. They also warn that its not just home insurance which may be affected by climate change. Motor insurance could be hit with extreme weather leading to more accidents.

John Parker, head of general insurance at the ABI, said “Managing risk is central to our industry, and insures must be equipped to analyse the new risks arising from climate change, and to help customers protect against them.”

Last Years major floods, and the repeat incident earlier this year has brought flood insurance to the forefront of peoples minds. For many people, flooding is a fact of life. There are more than 2 million homes at risk from coastal or inland flooding (10 % of total homes in the UK), and around 400,000 homes at very high risk of flooding. Climate change will increase winter rainfall, the frequency of heavy rainfall, and sea levels and storm surge heights. With no change in Government policies or spending, climate change could increase the number of properties at risk of flooding to 3.5 million.

In the modern competitive insurance market, premiums reflect the risks that customers face. This enables insurance to be offered at very competitive prices to customers living in low flood risk areas.

Preparation is key, with homeowners needing to evaluate their existing home insurance premium, and with the vast number of insurance companies offering cheaper deals and vying for your money then you should shop around and find the best deal which will cover all possible incidents which could affect your particular home in the unpredictable future.

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Drew is an author of several articles pertaining to Home Insurance. He is known for his expertise on the subject and on other Business and Finance related articles.

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