It's not possible to insure a house (flat)

[IR35 Avoider]

As my home comprises two-thirds of my net worth, and I'm counting on my assets to sustain me for the next 40 years, as I'm easing myself out of the world of working for a living, I'm more than a little concerned to make sure that the value of my flat is as protected as possible.

So what happens if Osama Bin Laden lets off a Nuke in the City (10 minutes walk from me) or something causes the Thames to rise and flood the area where I live. (Thames is a couple of stones throws away and my building is in a dip below the current high-tide level of the river.) (Assuming I'm alive to care, of course.) In both cases the buildings insurance only covers me for the rebuilding cost of the flat, which is only (say) a fifth of what it's worth, and rebuilding won't be possible anyway. (And yes I know it doesn't cover me at all for the nuke.)

As far as I can work out, I cannot insure myself against the loss of the economic value of the flat, as opposed to the re-building costs. The value of the flat is 80% the legal right to occupy the space, and 20% the bricks and mortar. The type of events that could render the "right to occupy" worthless are so unpredictable that it's impossible to calculate an insurance premium for them; therefore no-one will offer insurance against them.

I therefore conclude that in terms of investment risk it's madness for a retired person to be a home-owner (unless their home is a very small proportion of their wealth.) Anyone want to buy my flat and rent it back to me?

[expat]

As my home comprises two-thirds of my net worth, and I'm counting on my assets to sustain me for the next 40 years, as I'm easing myself out of the world of working for a living, I'm more than a little concerned to make sure that the value of my flat is as protected as possible.
...
I therefore conclude that in terms of investment risk it's madness for a retired person to be a home-owner (unless their home is a very small proportion of their wealth.) Anyone want to buy my flat and rent it back to me?

It's only madness to depend on owning a place, in such a dangerous location, where its "value" is much more than its value.

Buy somewhere (above sea level) where there's lots of space, so that you don't consider the "value" of the house to be worth more than a house.

[swamp]

I don't suppose you plan to retire in London...?

Sell up and move to the country before the Thames rises too far. And don't buy anything like this

http://www.sepa.org.uk/flooding/photos/flooded-home.jpg

or this

http://www.bbc.co.uk/norfolk/content...00_400x278.jpg

[AtW]

The type of events that could render the "right to occupy" worthless are so unpredictable that it's impossible to calculate an insurance premium for them; therefore no-one will offer insurance against them.

I think the issue is not being unable to calculate probability of the event - the issue is that when it happens it will result in such massive losses that insurers will go bust and won't be able to pay them. The only way to work that around is to hike premiums to such a level that nobody would pay then, so its easier for firms just to exclude this event completely.