By Julie Armstrongand Thom Kennedy

Last updated 12:45, Thursday, 07 August 2008

Homeowners face paying five-figure excesses on home insurance for flooding – even though they don’t live in a flood risk area.

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Floods: The 2005 disaster

A study carried out in June by national mapping agency Ordnance Survey (OS) has found that 16,700 homes classed as flood risks in Carlisle could be incorrectly classified.

And with many homeowners paying inflated insurance premiums to guard against flooding, local homeowners could be shelling out extra for nothing.

Paul Hendy, from Communities Reunited, which helped with the city’s recovery from flooding said that one property in the Warwick Road area had a £50,000 excess for flooding on its insurance policy.

Many others would have to pay a £10,000 excess in the event of a flood.

He added that premiums in areas deemed to be at risk of flooding often increased by between £100 and £250 a year after the scenes of January 2005.

Mr Hendy said: “What is annoying is that the data is there to be able to correctly assess people’s flood risk and premiums, but at the end of the day the insurance companies are choosing not to use that data.

“It is effectively pricing the flood protection that policies should offer out altogether, as people just won’t make a claim. How many people have £10,000 to put up front?”

Tracey Tait, of Petteril Street, said her premium had gone up from £25 per month to more than £60 – a rise of more than £400 per year.

But since the building of flood defences in the Warwick Road area in which she lives, she is now paying high premiums in an area not at high risk of flooding.

She said: “I think the biggest problem is once you have got insurance you are stuck with it.

“They can raise it to whatever they want as no other companies will touch you because of the flooding.

“But I don’t think we are anywhere near the risk we were before.”

OS analysed 24,000 addresses in Carlisle, using MasterMap, its large-scale geographic database, and detailed historic data on flooding from the Environment Agency.

And they found that of these homes, 16,700, or 69.6 per cent, could be incorrectly classified.

They are believed by insurance companies to be at risk of flooding, simply because they share the post code of a high risk property – even though they themselves may never have flooded.

British insurance companies in the other towns analysed by OS – Peterborough and Kingston Upon Thames – could also be missing out on revenue from properties in flood-risk areas.

Sarah Adams, insurance sector manager at OS, said: “Buildings situated in specific post code areas are often automatically pre-marked as ‘at risk from flooding’, which our analysis proves is very often not the case in reality.

“As a result, insurers could be overlooking or offering, uncompetitive quotes for certain addresses, and are losing out on potential revenues.

“By extrapolating our findings to a national scale, the problem is likely to be costing insurance companies millions of pounds every year in lost opportunities.”