Flooding doesn't have to dampen your business

Most British people have had a summer barbecue rained off unexpectedly often enough to know we’re never too far away from a rain shower. But for some businesses, even the threat of rainfall can be a worrying prospect.

The UK has seen a number of devastating storms in recent years. Indeed, the effects of Storms Ciara and Dennis are still being felt by many businesses over a year on, with the insurance industry receiving 10,600 claims from businesses alone as a result of storm and flood damage, totalling almost £150 million^[1].

But whilst the costs of dealing with the aftermath of a flood are covered by an insurance policy, the worry for some businesses comes when they receive their renewal invite and find out that their insurance provider is no longer willing to give them flood cover – or will give the cover but with a very large excess.  For many businesses who already know they are susceptible to flooding in their area, the prospect of having to deal with a loss without the peace of mind that they are insured could ultimately force them to close their business.  For property-owners who can no longer buy the cover, there is the prospect of a devalued asset which becomes not only unattractive on the rental market but might ultimately be difficult to sell.

Whilst the UK insurance market and Government-backed scheme known as FloodRe have provided that peace of mind for private householders, there is currently no such support for those occupying commercial premises.

So, what can you do if you have been told by your insurer that they will no longer give you flood cover?

Talk to your broker

By engaging with your broker well in advance of your renewal, particularly if you have suffered a flood in the previous 12 months, they can agree a strategy for remarketing your insurance. Generally, all insurers use some form of topographical mapping to assess flood risk, coupled with their own claims data, but they won’t all come to the same conclusion about whether a risk is flood-insurable. Simply by switching insurer, you may be able to get the cover you need.

Manage and mitigate your risk

There are many things you can do to reduce your risk of flooding:

• Consider the engineering of your property. It might be possible to build retaining walls, improve the thickness of doors and buy special covers for ventilation bricks.
• Think about moving electrical sockets higher up the walls.
• Install flooring which is less likely to be damaged by water – wood and laminate will absorb water and will need replacing whereas stone or tile floors offer far more resistance and reduce both clean-up time and cost if your premises floods.
• Ensure stock and valuables are kept at a height above a level that any incoming flood water is likely to reach. Some policies provide cover for loss mitigation in the event of an emergency situation, so there may be some help available from your insurer towards this.
• Keep an eye on flood warnings and alert levels, particularly if your property is in a known flood risk area or near a water course. The Environment Agency have a free flood warning service which will provide alerts should your business be at risk of flooding.
• Focus on good housekeeping – ensure all drains and soakaways are kept clear of debris and are free from obstruction.
• Ensure that you have a flood plan in place and that all your staff know what actions to take.

Excess Protection

If you can only find flood cover with a large policy excess, then there is the option to arrange insurance cover to protect that excess. The cover is generally available up to an amount of £50,000, although your broker may be able to secure you a higher limit in some circumstances.  But for many policyholders, this will go a long way to plugging the gap or even providing complete coverage depending on the extent of their policy excess.

Parametric Insurance

Where your broker is unable to find flood cover from any insurer, there is another option which works using modern technology.  The award-winning FloodFlash solution provides a limit of indemnity which is payable if flood water reaches a pre-set height limit. A sensor is fitted to the wall of your building which measures the height of flood water and once the trigger height is reached then the claim will be paid.  This offers a lifeline to many businesses who have become uninsurable and allows them to continue operating with the knowledge that they do still have some protection should the worst happen.

Whilst our climate is unlikely to see significant change in the coming years, the insurance industry is innovating new solutions for policyholders all the time.

At Aston Lark we understand the traumatic effects of flood and the impact they have on our clients and their businesses. Our specialist knowledge can help you to manage your flood risk and help you find the right insurance solution for your business.

Contact us on 0207 543 2800 to find out more.

[1] Source: Insurance Edge: 7 March 2020