The cost of flooding

Eleven rivers are threatening to burst their banks

In what is becoming an annual event, floodwaters are once again threatening homes across a number of British counties.

After a weekend of rain that delivered a month's worth of water, Kent, Essex, Cambridgeshire and Suffolk have all been placed on flood alert by the Environment Agency.

Jonathan Wortley, regional flood watch manager at the Environment Agency, said: "The biggest problems for us are in the Braintree area, where we had 60mm to 70mm of rain.

"The water is getting into the tributaries so we are getting people further down the rivers flooded."

Cruel blow

For those affected by the floods, another year of rising waters will be a cruel financial blow.

And while the financial pain may be most acute in the short-term, flood waters could yet do greater financial damage over the longer term.

Small businesses could face a double blow with a loss of trading and increased insurance costs

Flooding has implications for the cost of insurance, house prices and the profitability of smaller businesses as well.

Homes that have been recently flooded or that are in flood-prone areas often sell for less than homes in safer areas.

Last year's floods cost the insurance industry about £760m.

Not surprisingly insurance premiums in flood-prone areas have skyrocketed over the past year.

These insurance premiums can be a major cost for small businesses that may also face a loss of trading due to rising waters.

Premiums up by 80%

John Clarke, owner of Clarke's Jewellers in Lewes in East Sussex, has seen his insurance premiums increase 80%.

Mr Clarke told Working Lunch: "Last year on 12 October we were completely devastated by a flood from the River Ouse.

"This year our insurance fell due on 13 August and our broker had a problem securing insurance. He managed to do it by spreading the risk amongst a number of insurers, which ended up costing us 80% more."

There has been concern among homeowners and businesses located in flood-prone areas that insurers would refuse to insure them.

Deal agreed

In an effort to avert this insurers last year agreed a two-year deal to continue providing insurance to areas affected by flooding.

The trade-off for the insurers is that the government has agreed to use these two years to improve flood defences.

But no matter how extensive flood defences are, homes built on natural water courses or flood plains will always be at risk and will inevitably have to pay more for insurance.

Inigo Wilson, a spokesman for the Environment Agency says: "Flood defences are built to protect against a certain level of risk. Typically they are built to defend against a one-in-100 or one-in-150 year flood. Last year we saw floods that breached one-in-300 year levels.

"It is a fact of life that you cannot protect against that sort of occurrence - there just isn't enough money to build flood defences like that."

If you are determined to avoid flooding, and the associated costs, the answer is to build or buy a home in an area that is not liable to flooding.

Flood map

To help you do this the Environment Agency has produced a flood plain map that shows areas prone to flooding.

The map is available on the agency's website which can be found at http://www.environment-agency.gov.uk.

The map is a useful aid to determine flooding risk. But Mr Wilson says that it is not a one stop shop.

"The flood plain map is an indicative tool based on a number of different stories that we have brought together to indicate the chance of one-in-100 year flood levels.

"People should not rely on it totally. Any investigation should be supplemented by local investigations.

"That can involve anything from checking with local surveyors, government records or just asking neighbours and local businesses about past flooding."