PUBLICATION of a new multi-million pound flood-risk map has led to fears it could create a postcode lottery for homeowners seeking insurance.

Concerns have been expressed that premiums in flood-prone areas could soar sky-high and some homeowners could even be refused cover.

The claims follow the unveiling of the Environment Agency's new on-line flood-risk map on which areas can be checked by postcode.

Part of a £30m initiative by the agency, the idea is to allow homeowners and businesses to see whether they are at a low, moderate or significant risk.

It covers, for the first time, those areas that could be affected by an extreme flood and has identified an additional 400,000 properties that could be at risk in exceptional circumstances.

It uses a new digital model of England and Wales, local surveys, expert knowledge and also takes into account the risks from 35 per cent more, mainly smaller, rivers that were previously unmapped.

The level of risk is judged by both proximity to rivers and the coast and the presence and protection afforded by flood defences. Areas at significant risk are judged to have a one-in-75 chance of flooding each year, while low risk areas are where the chance is one-in-200 or less.

However, Gerard Salvin of North-East-based Lycetts, one of the country's biggest independent brokers, warned of the possible knock-on effect.

He said people in vulnerable areas of the North-East had already encountered problems and added: "The postcode system is too arbitrary.

"It doesn't matter if you live on a hill, or have never been flooded, if your property falls within the 'wrong' postcode many insurers will automatically refuse cover."

However Michael Tarling, of the Association of British Insurers, insisted that fears the map would lead to higher premiums for some householders were unfounded.

"Insurers have already been using maps like this for some time," he said.

"We don't believe it's true that it will lead to higher premiums across the board. It may help to have the reverse effect because it's going into a lot more detail than was previously available about postcode areas.