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ABI and Government disagreement puts commercial property & residential home owners at risk27th November 2012

The announcement that hundreds of thousands of homeowners face unaffordable house insurance policies next year as discussions between the Association of British Insurers (ABI) and the Government continue to disintegrate should serve as the strongest warning yet to property owners of the importance of obtaining detailed risk reports before committing to a purchase, said Simon Boyle, legal director at Argyll Environmental.

“The potential collapse of an agreement between the ABI and Government will not only affect people when they experience flood damage. It will influence the ability to secure a mortgage, re-selling and ultimately the value of the property.

“With one in six at risk of flooding and fresh warnings from the Environment Agency and Met Office of more wet weather to come, we must not disregard the real threat flooding poses to our businesses and economy. Furthermore, with the news that the Government is refusing to guarantee an overdraft if insurance funds run out, many more commercial property owners are also going to be at risk as insurers may not continue to be able to cover their property and any flood damage which could serious have knock-on effects for the business.

“The Law Society has yet to produce a Practice Note for flood risk, but under our current climate conditions, and with this worrying development in the insurance industry, we strongly believe flood reports should be part of due diligence for all property lawyers. Businesses should be putting continuity plans in place now and even if they do not think they are in a flood risk area, obtain a flood risk screen report to ascertain their flood risk.

“The message to property owners is simple: forewarned is forearmed.”

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