Homeowners denied full home insurance cover due to flood risk fears based on ‘map errors’

Thousands of homeowners are being denied full home insurance cover due to flood risk fears, with claims that some householders are being wrongly denied cover.

People who are not in flood-risk areas are claiming some of the maps being used by insurers to identify flood-prone areas are inaccurate.

Without full cover, homeowners are unable to sell their homes or switch mortgages.

Head of one of the biggest insurance brokerages in the country, Paul Kavanagh of the Cork-headquartered McCarthy Insurance Group (MIG), said more than 100,000 homeowners were being denied cover for flooding. The issue affects business premises as well.

Mr Kavanagh said this leaves homeowners exposed to massive expenses if their homes are flooded.

Being denied full insurance cover also means homeowners are unable to switch mortgage or move home, as banks will not finance a home that does not have full cover, Mr Kavanagh said.

Estate agents say an inability to get full cover also devalues a home. And businesses are unable to use their premises as collateral for a loan if there is an issue with insurance cover.

Where flood cover is denied policies will cover the likes of theft, contents and liability, but banks and potential buyers are not interested in doing deals for homes that do not also have flood cover.

Mr Kavanagh said some of those being denied full cover were in flood-prone areas, with insurers not interested in providing cover in areas that have flooded in the past.

But he claimed many others being denied cover were in areas where flood defences have been installed, or where geo-coding maps were inaccurate.

He said Brexit meant the British insurer that was underwriting policies here to cover flood risk is no longer prepared to serve this market due to the UK pulling out of the European Union.

Mr Kavanagh said: “The problem is all insurers purchase geo-coding software from specialist companies to detect areas prone to flooding and subsidence.

“The insurers then apply this geo-coding to new and renewal business.

“Nearly all these insurers have re-written all their home policies in the last five years to avoid such risks.”

A former president of the brokers’ representative body, Mr Kavanagh accused insurers of commoditising home insurance and flood cover.

This means they are offering identical cover, based on the same data, distinguished only by its price.

A number of homeowners have been in contact with this publication claiming that insurers here are all using the same geo-data maps, and they insist these maps are full of errors.

Consumers said they are being denied cover even though there have never been floods in their area. Some claim they are living miles away from water.

Mr Kavanagh said: “Insurance Ireland members have commoditised home insurance.”

He also accused insurers of devising a set of questions on insurance proposal forms that avoid reference to floods, subsidence, coastal risk and non-standard roof construction.

This gives them an “out” if there is a dispute raised with the Financial Services and Pensions Ombudsman, Mr Kavanagh added.

“The Financial Services and Pensions Ombudsman can only rule on the questions answered in the contract and the circumstances of a disputed claim,” he said.

Insurance Ireland, the representative body for the insurance sector here, was asked if its members are using geo-data maps that are inaccurate by claiming areas are prone to flooding when they are not. It said the provision of flood cover is a commercial matter for individual insurers.

“Insurance Ireland does not have any role in insurers underwriting decisions to provide flood cover as part of a household insurance policy,” it said.

It said the Central Bank, in its Irish Flood Insurance Survey conducted in 2021, found that 97pc of Irish property insurance policies include flood cover.

“Where some consumers have issues with the availability of flood insurance, each risk is reviewed and underwritten by individual insurers on its own merits.”