Flood risk can raise home insurance costs, ERR reports

Homes in areas at greater risk of flooding or storms may cost more to insure, but Swedbank and If Insurance say they assess each property individually, ERR reports.

Unusually heavy rain caused flooding in Pärnu about a month ago, leading to a sharp rise in insurance claims. Water flooded basements, garages and ground floors, and entered buildings through roofs.

Swedbank home insurance head Sandra Dõba said damage from storms, hail and floods was becoming more common as extreme weather events occurred more often. She said premiums could be higher for properties in areas at greater risk, but a coastal location or previous weather damage did not automatically mean a property could not be insured or that future claims would not be paid.

If Insurance does not set separate prices for areas with higher flood risk, so home insurance in Pärnu is not automatically more expensive than elsewhere in Estonia, said the company’s property insurance product manager, Hardi Saarniit. However, the property’s location is considered when a policy is drawn up. The company uses the Land Board’s map of flood-prone areas to assess the risk to individual properties.

A building in an area at high risk of flooding may be subject to a policy condition excluding compensation for flood damage. If also does not offer home insurance in a small number of very high-risk locations, usually close to the coast. Saarniit said that living in Pärnu or having experienced flooding did not necessarily mean a higher premium or less cover; the decision depended on the property’s risk assessment and the agreed policy terms.

Dõba said damage would not be treated as an unexpected event if a policy was taken out after a storm or flood had begun, or when damage was already unavoidable. Otherwise, storm and flood damage can be insured events, subject to the policy terms. A later storm or flood in the same area would generally be treated as a new claim, though the outcome would depend on the circumstances. Insurers may reduce or refuse compensation if damage is linked to unrepaired earlier damage, poor maintenance or another cause unrelated to a new, unexpected event.

Past storm damage in Estonia has most often involved torn-off roof sections, fallen trees and objects blown away, such as trampolines and garden furniture. Recent heavy rain has also led to more flooding and other water damage. The weather service forecast strong winds and rain for Friday evening and Saturday night.