This note sets out our approach to cases where a consumer has flood damage to their property - and in particular, whether they have a valid insurance claim.
Insurance policies for properties - both residential and commercial - usually provide cover for any loss or damage that is caused by flooding.
Most policies do not define what a "flood" is. So we often see cases that involve a dispute over whether a flood was actually the root cause of damage. We also see complaints about the way claims have been handled.
We sometimes see cases that seem to be about flooding, but that are really about the quality of the repairs that were carried out after the damage was done - or the time it took to complete those repairs. There is more information about our approach to these cases in our note household insurance: repairs.
We often see cases where a consumer has noticed that a ground floor or basement room - that had been watertight before - has started to let water in. These cases often involve an insurer having turned down a claim for the damage - on the grounds that it was not caused by a flood, but by a rise in the underlying water table. They often say that the property "was not adequately waterproofed", so any remedial work would simply be preventative - and therefore not covered under the terms of the policy.
We take the view that a flood does not have to be a sudden and violent event. We generally say that flooding can happen where water enters (or builds up in) a property slowly and steadily - and it does not necessarily have to be caused by the forces of nature. So water escaping from something inside a property could be the cause of a flood just as a river bursting its banks can. It is the fact that water has built up and caused damage that it is important. However, damage caused in this way is usually covered by insurers anyway under the escape of water peril.
We think this definition of a flood is in line with consumers' expectations.
We usually uphold cases where there is a clear causal link between a flood and the damage that the consumer has claimed for.
Many policies simply say that they cover "loss or damage caused by flood". In these cases, we usually decide that the policy did cover damage caused by flooding that occurred either inside or outside the property.
For example, we generally say that a consumer has a valid claim where their property had been surrounded by floodwater and where the floodwater has led to damp inside their property - but only if the damp has actually caused damage.
We sometimes say that a damaged property does not even have to become wet for the consumer to have a valid claim. For example, if floodwaters are so violent that they wash away earth and make a building unstable, we are likely to say that an insurer should pay the claim even if no water entered the building - because the building has still been damaged by the flood.
Tanking is a heavy-duty form of waterproofing often used in buildings
We sometimes see cases where a basement room - that was watertight before - has started to let water in, and the insurer says that the damage was caused by failed tanking - and that the tanking had failed because of wear and tear and/or lack of maintenance. Generally, we say that the cause of the damage was flood - not the failure of tanking. But if there is evidence that the consumer should have known that tanking was defective or missing before the flood happened, we may say it was reasonable for the insurer to reject the claim.
We occasionally say that an insurer should install tanking where there wasn't any before. This would be where it is clear that if the insurer did not do so, the repair suggested would only be temporary and likely to fail in the short to middle term. This sometimes happens when we are satisfied that an un-tanked room was watertight before, but has flooded because of a rise in the water table.
There may be little point in the insurer simply pumping out the water and repairing the water-damage if the room is going to keep flooding. The consumer had a dry room before - and they now have a wet or damp room. To "indemnify" the consumer - that is, to put them back in the position they were in before the flood happened - the insurer will have to ensure that the room is watertight again.
Insurers sometimes say that tanking failed because of a "gradually operating cause" - and that those causes are excluded under the terms of the policy. We are unlikely to agree that this is a good reason to refuse to pay a claim. This is because the damage occurred as a result of the accumulation of water - as opposed to the gradual deterioration of the tanking.
Following severe flooding in parts of the UK in recent years, there has been some concern in the media that insurers may stop offering flood cover to consumers in certain high-risk areas.
When we look at cases where flood cover has been or is being withdrawn, we take into account the ABI statement of principles on the Provision of Flooding Insurance. If we see that an insurer has withdrawn flood cover in spite of the ABI statement, we will consider the merits of the case.
But if we are satisfied that the insurer has acted in line with the principles set out in the ABI statement, we are likely to dismiss the case - that is, we will not consider its merits. That is because the case is about the insurer's legitimate exercise of its commercial judgment (see DISP 3.3.4R(11)).
"Secondary flooding" means damage that the consumer discovered some time after they took out their insurance policy.
We sometimes see cases where an insurer has rejected a claim from a consumer who had
The insurance industry generally agrees that the current insurer should accept a claim in these circumstances - unless the insurer can show that the damage in question was not caused by flood, but by an "uninsured cause".
When they deal with a claim like this, an insurer will consider whether to seek a contribution from the surveyor, or from the insurer that was providing cover when the flood actually took place.
When we see a case where an insurer has not taken this approach, we usually explain that it is now good industry practice for the current insurer to deal with flood claims that have only come to light during the current insurance policy.
A flood can cause extensive damage - and the upheaval during repair or remedial work can be lengthy and traumatic for the consumer. So we consider whether an insurer handled a claim sensitively and efficiently.
Where an insurer has handled a case particularly badly, we will consider whether to tell the business to compensate the consumer for the distress and inconvenience that the insurer has caused them. There is more information about our approach to compensation for distress and inconvenience in our note on non-financial loss - compensation for trouble and upset.
If the consumer (and perhaps their family) needed to be re-housed while repair work was carried out, we will consider whether the insurer offered them suitable accommodation. We will consider, for example, how similar the accommodation was it to the property that was being repaired.
So we would be unlikely to agree that a caravan in the garden was sufficient - unless the consumer had actually requested one. And we would not think it was reasonable to have expected a family to live upstairs, or be confined to one part of a property, while disruptive work was carried out elsewhere in their home.
contact our technical advice desk on 020 7964 1400
This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.