The insurance industry and the Government have struck a deal to ensure most households at risk of flooding are still able to obtain home insurance - although thousands of homeowners may still be unable to obtain cover.

The Association of British Insurers (ABI) had threatened to stop offering flood damage protection unless ministers invested more money into flood defences.

Under the agreement, insurers will guarantee to provide protection to properties at a medium risk of flooding, and will continue to offer flood cover to existing customers at significant flood risk, providing there are plans to reduce the risk within five years.

However, there will still be some properties that insurers can refuse to cover. The Floods minister will not say how many houses will be classed as undefendable against flood, saying only: “That is not for Government to declare.”

The Government, in turn, has committed itself to a long-term 25-year strategy to improve flood defences. It will also promote access to home insurance for low-income households; encourage property owners to take sensible precautions against flooding; and ensure housing is not developed in flood-risk areas.

Stephen Haddrill, the ABI's Director General, said: "This agreement is good news for everyone at risk of flooding. We are pleased that the Government recognises that a long-term investment strategy, adequately funded, is the best way to manage the growing flood threat.

“It will help ensure that the flood insurance protection, relied upon by millions of householders and businesses, remains widely available.”

ABI members paid out £3 billion last year after floods ravaged many parts of Britain. Insurers were confronted with four years' worth of claims in just two months, with 180,000 claims for homes, businesses and cars.

Floods Minister Phil Woolas said: "The devastation caused by last year's unprecedented rainfall has shown just how vital it is for people to be able to insure their homes and livelihoods against the risk of flooding.

"Working together we have succeeded in ensuring that flood cover is available in both the short and long term.”

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