Insurance in flood risk area
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Hells Bells
- Posts: 13173
- Joined: Sat Apr 30, 2005 8:42 am
- Location: French Alps
- Contact:
Thanks, I really appreciate the advice.
The one who will do it are a proper holiday let insurance, with all the public liability etc. They have clarified that as long as we stay in the property ourselves occasionally then we can pay Council tax, so not dishonest in any way!
But this means we are spending what amounts to £1800 a year to be insured. Which will make a huge dent in our profit.
We are feeling a bit worried about that, and although we have been so excited about the cottage I just don't know if this should be a deal breaker.
The one who will do it are a proper holiday let insurance, with all the public liability etc. They have clarified that as long as we stay in the property ourselves occasionally then we can pay Council tax, so not dishonest in any way!
But this means we are spending what amounts to £1800 a year to be insured. Which will make a huge dent in our profit.
We are feeling a bit worried about that, and although we have been so excited about the cottage I just don't know if this should be a deal breaker.
Thanks, I really appreciate the advice.
The one who will do it are a proper holiday let insurance, with all the public liability etc. They have clarified that as long as we stay in the property ourselves occasionally then we can pay Council tax, so not dishonest in any way!
But this means we are spending what amounts to £1800 a year to be insured. Which will make a huge dent in our profit.
We are feeling a bit worried about that, and although we have been so excited about the cottage I just don't know if this should be a deal breaker.
The one who will do it are a proper holiday let insurance, with all the public liability etc. They have clarified that as long as we stay in the property ourselves occasionally then we can pay Council tax, so not dishonest in any way!
But this means we are spending what amounts to £1800 a year to be insured. Which will make a huge dent in our profit.
We are feeling a bit worried about that, and although we have been so excited about the cottage I just don't know if this should be a deal breaker.
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Joanna
- Posts: 1091
- Joined: Thu Aug 23, 2007 3:12 pm
- Location: Chester, North West England & Sidmouth, East Devon
- Contact:
I thought the council tax v business rates issue was decided by how many nights per year paid lettings we took. I don't recall anyone actually asking me how often we stayed there.
We also didn't have to pay business rates to qualify for holiday let insurance - we had it from the beginning but it took us a few years to reach the business rates threshold.
We also didn't have to pay business rates to qualify for holiday let insurance - we had it from the beginning but it took us a few years to reach the business rates threshold.
Jo
Joint owner of Baker's Cottage in Chester & Chandler's Cottage in Sidmouth
Joint owner of Baker's Cottage in Chester & Chandler's Cottage in Sidmouth
Joanna, I also thought you had to reach a certain number of bookings per year (15 weeks), + availability for 140+ days/year, to qualify for business rates. Having done that I'm currently applying. But looking at the rules I think I may have been wrong. The Valuation Office website says that if you make your FHL available to let for 140+ days per year you qualify for business rates.
The letter I have received from the VA seems to confirm this, although there may be more information when we get into my application details.
loveka - my view is that no insurance company can override legislation and insist that you pay council tax. If this insurance company is quoting you for a holiday let, they must realise that you are potentially embarkinging on an FHL business. It might be worth a call to the Valuation Office (03000 501501) to clarify your position.
The letter I have received from the VA seems to confirm this, although there may be more information when we get into my application details.
loveka - my view is that no insurance company can override legislation and insist that you pay council tax. If this insurance company is quoting you for a holiday let, they must realise that you are potentially embarkinging on an FHL business. It might be worth a call to the Valuation Office (03000 501501) to clarify your position.
The best things in life are free
They told us it was a condition of the insurance, as they cede the flood part of the insurance to the government scheme, which they said is only available to people who pay Council tax, not business rates. The government (I think) underwrite the flood insurance in risky areas that insurers wouldn't normally cover, but this isn't available for businesses.
Whoever you spoke to may not have a complete grasp of the situation, and it has to be worth digging deeper to be absolutely certain.loveka wrote:They told us it was a condition of the insurance, as they cede the flood part of the insurance to the government scheme, which they said is only available to people who pay Council tax, not business rates. The government (I think) underwrite the flood insurance in risky areas that insurers wouldn't normally cover, but this isn't available for businesses.
Check this FAQ from www.floodinsurancedirect.co.uk ; I think I'd want clarification on what is meant by is used for residential purposes only
and If you are purchasing this home as a holiday let and you are not using it for personal use then it will be excluded from the scheme.
The second statement in particular seems ambiguous to my inexpert eye.
We are planning on buying a holiday home but have been told that we will find it very difficult to get insurance as it is in a flood risk area. Will this be included in the Flood Re scheme?
Your holiday home will be included if the insurance policy is taken out in your name and meets the other key criteria of the scheme. These are that the property has a council tax band and is used for residential purposes only. The holder of the policy, or their immediate family, must live in the home for some or all of the time or the home must be unoccupied.
If you are purchasing this home as a holiday let and you are not using it for personal use then it will be excluded from the scheme.
Understand now.
Yes, this government managed insurance scheme (which started this year) limits the flood part of your insurance to around £250, increasing as your rateable value increases. The rest is paid for from a fund, paid for by other home insurers through their own house insurance. From this year we all pay around an extra £10 per year on our home insurance to finance the scheme. As you say, it is only available for residential homes. I understand the scheme has a finite lifetime of around 20 years.
Insurers are not obliged to sign up to this scheme.
loveka - you seem to be stuck between a rock and a hard face. You either take the subsidised flood insurance but have to pay full council tax. Or, if you reach the threshold for business rates you pay the lower business rates but pay an increased flood insurance.
That is, if you buy.
Yes, this government managed insurance scheme (which started this year) limits the flood part of your insurance to around £250, increasing as your rateable value increases. The rest is paid for from a fund, paid for by other home insurers through their own house insurance. From this year we all pay around an extra £10 per year on our home insurance to finance the scheme. As you say, it is only available for residential homes. I understand the scheme has a finite lifetime of around 20 years.
Insurers are not obliged to sign up to this scheme.
loveka - you seem to be stuck between a rock and a hard face. You either take the subsidised flood insurance but have to pay full council tax. Or, if you reach the threshold for business rates you pay the lower business rates but pay an increased flood insurance.
That is, if you buy.The best things in life are free
One possible interpretation seems to be that if you qualify as an FHL, you don't meet the criteria for the government backed scheme. IF that is the case, it doesn't look like a solution for anyone doing much beyond having a property as a second home (ie "holiday home") rather than a holiday let. It also seems very unlikely that the scheme would cover loss of letting income in the event of flood, which could also be a crucial factor.Giraffe wrote:Greenbarn, my post crossed with yours. I agree, the wording is rather ambiguous. A major criticism of the scheme is that small businesses are excluded (on BBC You and Yours a few weeks ago).
This has a lot of orange flags at the moment; ie proceed with great caution and ask lots of questions just in case you ever need it to pay up and there's a big loophole.