Businesses must not be “forgotten” as the clear up operation from this winter’s floods continues in many parts of the UK, according to a leading online insurance broker.
Stuart Bennett, a director of Quote Dave – www.quotedave.com – says companies face a potential “double whammy” as a result of the devastation wrought in many towns and cities.
The first issue concerns a new facility called Flood Re – www.floodre.co.uk – developed by the Government in conjunction with the insurance industry. It will be in place for 25 years and aims to enable flood cover to be affordable to households at the highest risk of flooding. It has, however, not been extended to the business community.
The second issue concerns the fear that wet winters will become the UK norm and the impact this may have on the long-term viability of the most at-risk communities.
Local authorities in some parts of Wales, including the seaside town of Fairbourne, are believed to be preparing for a managed retreat at some point in the future.
Stuart said: “Flood Re is long overdue for domestic properties, but the exclusion of businesses from it is a kick in the teeth to the owners of SMEs desperately trying to get back on their feet after the sustained flooding of recent months.
“This exclusion also applies to landlords meaning there is every possibility in the future that two neighbouring properties could be treated in significantly different ways depending on ownership.
“There are also serious longer-term issues facing businesses in the areas most prone to flooding including many of our most historic Northern towns and cities.
“The flood issue is going to be high on the agenda of businesses and the insurance industry for many years to come, particularly if we continue to experience wet winters.
“The number of businesses insurers will not cover or apply prohibitive terms to are only going to increase.
“Businesses in flood risk areas face years of uncertainty unless insurers are willing to provide the cover they require or the country’s flood defences are significantly improved.
“Without these two elements businesses are going to find it virtually impossible to trade. This could, in turn, lead to the drain of companies and jobs away from some towns and cities.
“The knock-on effects would be catastrophic in all sorts of ways including the impact on house prices locally if there were no businesses and jobs nearby. Businesses must not be the forgotten victims of the flood crisis.”
Stuart said another issue facing businesses coming to terms with flood devastation was underinsurance.
Underinsurance can result in inadequate claims settlement or no claims settlement at all.
Stuart added: “Many of the businesses in flood hit regions will be unable to trade for a considerable period of time. Having the right insurance in place is vital during a period of business interruption because it helps to ensure that business bills are paid while it cannot trade normally.
“Underinsurance can be on the sum insured or more likely the indemnity period – how long an insurer will pay out for.
“Many businesses choose an indemnity period of 12 months, a time frame which is often found to be inadequate. In the case of a flood claim this could be a considerable period of time while the drying out and cleaning up process takes effect. Many businesses work on the best case scenario to calculate how quickly they will be back trading, although events such as floods highlight the scarcity of resources available – equipment and people – to do the remedial work.
“The actual work may only take a month but if you have to wait three months for the property to dry out and then a further six months for the tradesmen to be available then you don’t have much time to restore your business fully before your 12 months are up. If you require planning permission during the process then the times are even longer.”
Stuart added: “The flood devastation has highlighted just how important it is that businesses receive the right advice about their insurance.
“We would recommend that all businesses, particularly those in the flood affected regions, take 20 minutes to check their policy and, if they are in any doubt, to take specialist advice.
“If a loss occurs, you do not want to be hoping that the loss is covered. A business wants to know that it is covered.”
