Car insurance may be affected by floods

Thu, 23 Aug 2007

The cost of insuring a car in the UK is set to increase, due to the worst flooding in 60 years.

Heavy rainfall led to widespread unexpected flooding earlier this year, putting the pressure on insurance companies. One of the ways in which they are expected to recoup their losses is to increase the cost of car insurance .

Major UK car insurance company Norwich Union has already announced a premium increase of 16 per cent. With one of the largest motor insurers in the UK taking this step, other companies are expected to follow suit.

Flood claims exceeded 60,000, to a value of over £3 billion. One consultant at EMB, Paul Moorshead, was reported in the press as saying: "There’s clear evidence that insurers have been using some of the home insurance profits to crosssubsidise their motor book. That will stop in light of the heavy claims they're getting from the floods."
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