Beleaguered towns and villages in England have been dealt a further blow as more rain battered the North East and 200,000 householders across the country were warned they could lose their home insurance policies.

Environment Secretary Owen Paterson attacked the insurance industry for causing flood victims "alarm" after people were warned they could lose their home cover.

Three people have died since the latest bout of severe weather struck, forcing hundreds of people to flee water-logged properties.

Some 530 flood warnings and alerts remained in place as insurance chiefs hit out at the Government, claiming negotiations over future cover have hit an impasse and are now at "crisis point".

The two sides are locked in talks relating to the replacement of a "safety net" deal to ensure those in flood risk areas can continue to afford their policies which are set to expire next year. Insurers have called on the Government to provide a temporary overdraft facility to pay claims for 200,000 high-risk households in the event of serious flooding such as that seen in 2007.

Nick Starling, director of general insurance at the Association of British Insurers (ABI), accused ministers of rejecting its proposals. "We want a solution even more now after the difficult events of the weekend," he told the BBC Radio 4 Today programme. We seem to have reached an impasse. The Government has made it clear it's rejected our solution."

But Floods Minister Richard Benyon insisted the Government remained "really determined" to reach a deal and that the issue was an "absolute priority" for the Department for Environment, Food and Rural Affairs (Defra). He criticised the ABI for airing its concerns at the height of the crisis.

He said: "I think it is actually rather demeaning at this particular moment in time to be talking about this. It is rather a shame that it has been raised at this particular moment when there are a lot of distressed people with flooded homes."

Widespread flooding has caused major disruption across the North East, with persistent rain creating a continued risk of surface water and river flooding. The Environment Agency said there are currently 17 flood warnings and 37 flood alerts in place for Yorkshire and the North East.

But with the rain persisting, communities are being urged to be vigilant as more warnings could be issued.

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