In fact, 1 in 6 properties in the UK are now at significant risk of flood[1]. It’s not surprising therefore that the Association of British Insurers (ABI) estimates that in 2020, insurers paid out a total of £214m in flood claim payments, £85m of that relating to commercial property claims. [2]
There are three main types of flood; flooding from overflowing rivers, coastal flooding from seas and lastly surface water floods, also known as flash flooding.
The water level can often rise in a river, stream, lake, etc., causing an overflow; this may be triggered by high rainfall or snow melting for instance. The damage consequences can be massive and also have a knock on effect to other rivers downstream. If nearby soil has been saturated due to previous rainfall then this will not help minimise the flow.
The damage of seawater overflowing onto main land can be devastating and a threat to life. This is often caused by high winds forcing water on shore. During a high tide this can result in a large windstorm coastal flood.
Current drainage systems cannot often cope with large downfalls of rain, causing drains to overflow into roads and surrounding areas. Property damage is the main consequence of surface water flooding. Flash floods can also occur in a short timeframe with a torrential sudden downpour causing a strong force of water and debris to flow.
There is no doubt that insurers have been hit hard by flooding in recent years, with many parts of the UK being severely affected. Premiums for property policies have risen for a number of reasons to reflect increased claims payments; and incidents of flooding have naturally contributed to this increase. Some insurers have tightened up on their flood zone areas with some now excluding flood in certain postcode areas or imposing a high flood excess.
Flood Re is an initiative set up by the government in conjunction with select insurers who will offer flood cover to home owners in typically excluded flood areas, but this is not yet available for commercial property. It is therefore imperative that business owners understand their flood risk. Standalone flood cover can often now be purchased for clients who cannot include flood cover within their main property insurance policy.
It is also imperative that your building is insured for the correct building sum insured to fully reinstate your building should you have a flood damage claim. This will enable you to obtain the full claims settlement rather than being penalised for under insurance.
Additionally you may decide to invest in a thorough flood risk assessment of your property. Mitigating risk in this way is favoured by insurers, so they may feel more comfortable about offering some cover for flood especially if they know what measures you have taken to prevent the potential damage.
Coastal areas and rural areas are particularly at risk. Many people envisage a flood when a river breaks its banks in a rural area, however flash flooding is very common in urban areas with no large water source nearby with even areas like London most recently affected.
How do you know if you are actually in a flood risk area? You are able to check the Government website, Gov.UK for flood alerts and a flood rating of your postcode. You may also have heard from your broker or insurer that you may potentially be in a flood area. History of flooding in the area is also a good indicator. It is good advice to sign up to flood alert warnings from the government website as well as be aware of long term flood risks where you live.
Not all flood damage can be prevented however practical solutions as below can help to some extent:
Ensure you have a BCP if the worst comes to the worse should a flood occur at your business. It is particularly important to plan ahead if you know you are in a susceptible flood area. Would you know what to do next or who to contact?
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