Met Office thunderstorm warnings reinforce necessity of robust property insurance

Met Office thunderstorm warnings issued this week, including cautions over the risk of flooding and building damage, have brought the issue of property underinsurance back into focus.

More than forty Environment Agency flood alerts were in place as of the afternoon of 27 August as storms and heavy rain swept across the UK, with the Met Office warning that some buildings could be damaged by floodwater, lightning strikes, hail or strong winds.

Cos Kamasho, principal consultant at BCIS, concurred that severe weather can increase the likelihood of property damage, adding that it also raises the chance of claims being made. Where underinsurance already exists, a claim may expose a shortfall between the sum insured and the property’s rebuilding cost, underlining the importance of routinely reviewing sums insured against up-to-date rebuild cost data.

He said: ‘Thunderstorms and heavy rain again bring property underinsurance risk into focus. They can lead to flash and surface water flooding damage to buildings, while increased moisture can cause clay soils to expand, push up foundations and create structural cracks. These events are more likely to result in partial damage than the total loss of a property, but that doesn’t make underinsurance any less of an issue where claims are made.

‘Where an average clause applies, claim payments are typically adjusted in proportion to the level of underinsurance. This means even a partial loss can leave a policyholder facing an unexpected financial shortfall.

‘As our climate becomes more extreme and unpredictable, potentially compounded by the developing El Niño event, robust rebuild cost data is vital. It should be a golden thread throughout the property insurance life cycle, helping all parties fulfil their respective responsibilities and strengthening relationships between insurers, brokers and clients. Ultimately, it’s about helping ensure policyholders have the right level of protection when they need it most.’

The latest flood warnings follow five heatwaves in the UK earlier in the summer and the declaration of drought across most of England and all of Wales.

Drought can also increase the risk of property damage. In areas with shrinkable clay soils, dry conditions can contribute to ground movement and subsidence, which can result in structural issues.

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