Cuts in investment in flood defences as a result of the Comprehensive Spending Review could make homes near rivers and the sea uninsurable and would seriously affect their value.

The UK is among one of the few EU countries which does not provide automatic flood insurance with a home insurance package. The industry?s agreement with the government, which runs out in 2013, states that cover must be provided as long as defences are kept in good order. However, homeowners are concerned that cuts to promised flood defences in vulnerable areas will invalidate insurers? liability.

More than a million homes across the country are affected, including parts of London as well as coastal, riverside and other major city locations. Lack of available flood insurance would render the properties at risk of losing at least 40 per cent of their value and it would also make it difficult to raise a mortgage on homes that are situated in vulnerable areas.

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