Flood risk – stemming the flow of unwanted water

If taking out insurance at your business premises for an event that may never happen doesn’t sound like your way of working, we’d advise you to stop thinking in terms of “possibly never” and start reading the following sound advice and insight – especially when we’re talking about the risk of flooding. In this article we’re focusing attention on floods that have arisen not due to a tap left on or a leak from machinery – but the impact of weather and climate changes.

The current flood risk picture

Over the past few years, flood occurrence has increased, and with it, not just the issues of excess water, but the cost to clean up and repair. Naturally, this has had a direct impact on insurance claims – whether that’s for personal property, business premises or even damage to wider areas (for example roads, parks, pedestrianised areas) that would fall under the jurisdiction of local councils and government.

Looking ahead

Once upon a news story, it used to be just cold or traditionally “wet” times of the year when we’d read or hear about extreme rainfall where a large area was flooded, or a river burst its banks. But if things keep on going in the same direction, according to Met Office research, extreme rainfall events could be “four times as frequent by 2080 compared to the 1980s”.

To reach this worrying conclusion, they’ve created and presented an advanced data model that can continuously deliver and project a hundred years of past, present, and future rainfall intensity that can analyse the risk of flash flooding. 

This powerful tool is a world away from our TV weather forecaster being able to predict that an umbrella will be required tomorrow or the day after; it can dive deep into the historical causes and long-term likelihood of a host of major weather patterns and events. 

Read more about the tool here.

What we can say with certainty is that the sudden weather changes that lead to flash flooding and in turn, extensive flood damage, are mainly down to global warming. Changing weather fronts at unseasonal times have seen many towns taken by surprise. This issue is further exacerbated by a level of unpreparedness and subsequent chaos – which has even led to fatalities.

What are deemed to be high-risk areas such as low-lying land and towns close to rivers or the sea have been consistently overwhelmed by rapidly rising water, so it’s a critical time to up the ante and put in stronger measures to mitigate floods – whether these are the result of river flooding or surface water flooding. This also means that groups such as the Met Office, Flood Forecasting Centre, and Environment Agency (the EA) need to collaborate not just with each other, but also with the public, business owners and the insurance industry to agree and put in place both workable and sustainable solutions.

Floods in the real world

Before we move onto what can be done to safeguard property from flooding, and the key issues of finding the right insurance policy that does more than protect you from a very rainy day, let’s briefly look at four examples of flash flooding incidents, and the price paid to both people and places. 

• At the time of writing (May 2024), it has just been reported that a flash flood in Afghanistan linked to heavy rain climate change has resulted in major mudslides, raging flood waters, and the deaths of 315 people, with 1,600 injured, 2,600 homes destroyed, and 1,000 cattle killed. This is occurring in a country already in a state of flux, without any infrastructure or plan to get past this current crisis. UN aid lorries can’t even get trucks close to the affected area as the damage is so severe, so are relying on donkeys to make the perilous trek.
• In July 2021 there was serious flooding across central Europe that not only caused extensive and expensive damage to infrastructure but took more than 200 lives. In Germany alone, the costs were estimated to be €4.5-5.5 billion. With climate change listed as the key cause, the summer downpour intensity was estimated to have been raised between 3-19 per cent and gave the public a very stark picture of what water damage from flooding can do.
• In January 2023, rising water levels generated from the River Severn caused severe flooding across the central England counties of Shropshire, Herefordshire, and Worcestershire. Heavy rainfall over a prolonged number of days saturated land, which added to the river levels, causing the river banks to burst. Flood barriers were erected, but not in time to halt the water. The result? Cars and other vehicles floating down streets, people stranded in their homes, and businesses put out of action.
• In January 2024 in Nottingham, it was the River Trent causing significant issues. A major incident was declared when the banks burst, made all the worse as there’s a convergence with other rivers in the area – the Dove and Soar. Hundreds of homes were evacuated, businesses faced severe damage and losses, and many cattle drowned. Further consequences of the swollen waterways were road closures and cancellations to the rail network.

The true cost of flood damage

Bearing in mind these sobering headlines and stories, how bad can it get in the event of a flood? Above all else is the chance of serious injury or drowning. People have been trapped in their vehicles, swept down the river in a current, or knocked underwater on a deluged street. Add slips, trips, and swallowing contaminated water to the mix, and it can be a deadly time. This extends to animals – both cattle and domestic – who are also in danger.

Then there’s the immediate and long-term damage to property. Imagine if you’re the owner of a clothing store that is flooded. Stock will be soddened and water damaged, water and sediment in electrics and machinery will cause a whole other set of problems, and then there’s simply the lack of footfall and trade as the shop remains closed – not just for the duration of the flood period, but during the extensive clean-up operation. And in the worst-case scenario, there may have to be a complete rebuild. 

Now, imagine all of this but in a scenario where you’re underinsured or uninsured. That could well be the end of the clothing line for your business. We could scale up the scenario to a large manufacturing factory, or bring it down to a one-person food truck, but the outcomes for a business of any size may be catastrophic in the event of a flood. 

What can you do to minimise flood risk and impact?

There are places where the related agencies are working in partnership; that means there is a robust investment in stronger barriers, more immediate evacuation processes and alert systems, and local recovery plans. 

On a more granular scale, there are also quick and handy ways to check whether you’re in a high-risk area that’s prone to flooding such as this postcode finder. With the EA estimating that in England and Wales alone, around 185,000 businesses are at risk due to being in a flood-prone area, this should definitely be your first step towards flood resilience and protection.

What remains – especially if it transpires that you are in a part of the world where there is either a record or future fear of flooding – is the responsibility to put in place as many preventative measures as possible, and of course, ensure that you have correct insurance.

Further preventative measures and advice that will certainly help should a flood happen, and will keep down the cost of an insurance claim, should you need to submit one, include the following:

• Consider retaining walls, improve the thickness of doors, and buy special covers for ventilation bricks
• Think about moving electrical sockets higher up the walls or out of the ground away from water sources at ground level
• 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 are more resistant and reduce both clean-up time and cost
• 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, 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 has a free flood warning service which will provide alerts should your business be at risk of flooding
• Ensure all drains and soakaways are kept clear of debris and are free from obstruction
• Establish a flood plan, and make sure all your staff know what actions to take in the event of a flood

The insurance solution

With an increase in the fierce weather storms, hurricanes, and downpours across the UK in the last few years, it’s no surprise that the insurance industry has been inundated with business flood claims. According to the ABI (Association of British Insurers) in 2023 weather-related damage claims reached £573 million, which was a 36 percent leap from 2022 when it peaked at £421 million). 

But to make a claim, you need the cover there in the first place. And even if that’s the case, it’s not always straightforward.

A common concern is that even when a business has decent flood cover, if they do need to claim then any future renewal notice may come with a hefty payment and excess fee, which may make them think twice about lightening or flooding hitting the same spot again.

It’s now more important than ever to get a clear and current picture of flood insurance from your broker, who can work with you to ensure that you do indeed have adequate coverage that matches the needs of both your location and business premises.

It may transpire that there is a larger-than-expected policy excess, so make sure you discuss any option to arrange insurance cover to protect that excess (usually up to £50,000, but a broker can sometimes get you a higher limit). While the outlook upon reading this for the first time may seem a little cloudy, this could well plug any gap or provide complete coverage.

If you’re flooded and have that specialist insurance in situ, you’ll feel less worried knowing that a loss adjuster will be there to advise you on the next steps, such as what evidence to submit to support your claim and, if the damage is substantial, whether your business has a case for temporary alternative accommodation. Your loss adjuster can also guide you on how to make your premises safer and less waterlogged in the immediate aftermath of a flood, with tips on damage limitation.
 

What’s parametric insurance?

There is a further option if a broker cannot establish cover. Flood Flash – a product endorsed by Howden – provides a limit of indemnity which will be paid out if flood water reaches a pre-set height limit. This works via a wall-mounted sensor fitted to the wall of your building which measures the height of flood water. 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. 

Thanks to the frequency of intense storms (we could run through an A-Z of storm names in around three months), flash flooding remains a major issue for businesses. In order to make sure your business barriers are prepared with an insurance policy that’s fully weatherproofed, talk to our experienced and insightful team today on 0330 008 1334, or get a quote here.