With over 100,000 householders safely under its wings Flood Re has been a game changer for households located in high flood risk in obtaining affordable insurance. Flood Re however doesn’t cover everyone, one of the major exclusions being businesses of which it is estimated that there are some 300,000 are located in high flood risk areas. As such, businesses often face a periless task not only to find flood insurance cover but also to be able to afford it too.
Until 30th June 2012 many businesses were covered under the ABI statement of Principles which was an agreement whereby insurers continued to make flood insurance for small businesses available as a standard feature of a business insurance policy if the flood risk was no worse than a 1.3% or 1 in 75 annual probability of flooding occurring. Recent flooding events have placed as significant financial strain on the UK commercial insurance market with the winter floods of 2015/16 costing insurers over £100M and the floods of 2013/14 costing in excess of £446M. As a result of this, many insurers are now either declining previously insured businesses or significantly loading premiums and increasing policy excesses making many flood insurance cover for many businesses unaffordable.
The impact of flooding to a business can be devastating with statistics confirming that over 40% of businesses that are impacted by a major loss such as a flood do not re-open. It’s actually more likely for a business to be flooded than it is for it to be burgled or burnt down. Not only are businesses at a higher risk of flood than they are for many other perils, the cost of a flood insurance claim is often significant as well. The average flood insurance claim is roughly four times higher than a fire claim at between £75,000 and £112,000.
It’s often the impact of the business not trading that is the root cause of many businesses failing to re-open rather than simply the damage a flood can cause to stock and premises. Prudent business owners will have insurance cover in place for this, it’s commonly known as business interruption insurance and can usually be obtained as part of a business insurance package policy or added to an existing policy. Business interruption insurance covers costs including: paying employees whilst a business is not trading, compensating for loss/shortfall in profits, costs incurred due to supply chain problems or increased costs incurred as a result of a business being traded from a temporary location.
Flooding can impact a business in 2 main ways:
Directly – for example damage to premises and stock, lost electricity/gas and or telecommunications.
Indirectly – for example preventing customers and staff and deliveries reaching the business.
The impact of a flood on a small business can be particularly high as they often have a large proportion of customers and suppliers located close by many of whom may also be impacted by the same flooding event.
If your business is located in a high flood risk area it’s likely that you’ll have different needs to other business owners and therefore would benefit from specialist advise to help you find the right insurance cover. We’re establishing Flood Assist to provide business owners in high flood risk areas with a range of flood insurance solutions. If you’d like our help when we’re up and running click here to register your details and we’ll be in touch.