According to Ready.gov, the average flood claim within the past ten years was nearly $34,000. Now that spring is here – along with the melting snow, pouring rain, and rising rivers – floods may be a real risk for your business. A $34,000 risk. And if you don’t feel like taking that gamble, it’s time to make a plan.
A plan won’t stop a flood from happening, but it can help you minimize losses if your business is affected. And the more prepared you, the quicker your business can bounce back.
So let's find out:
- What you should include in a flood preparedness plan.
- How Commercial Property Insurance applies to water damage.
- Why floods can happen anywhere to anyone.
How Small-Business Owners Can Prep for a Flood
“Whether located in a flood zone or not, business owners should prepare for all types of disasters by having a plan in place before anything happens,” says Tom Head, president of cleaning and restoration company Blackmon Mooring and BMS CAT (@BlackmonMooring).
Indeed, it does you no good if you don’t think about flooding until you’re literally knee-deep in it. So take some time now to prepare yourself and your business for a flood. For example, your plan might outline how to:
- Secure and prevent the release of dangerous chemicals stored on your property.
- Shut off the main gas line and electricity to your building.
- Alert employees about evacuation or business closure.
- Elevate electrical items, inventory, and furniture to higher floors/surfaces.
- Postpone deliveries and services to and from your business
For a more comprehensive list of considerations, check out this flood preparedness checklist from PrepareMyBusiness.org.
You might also want to improve structural aspects to your building to prevent flood damage. Inspect your basement and surrounding property for points where water may build up or enter, and look into dry flood-proofing and see if it’s financially feasible for your building and location.
As for after the flooding, it’s absolutely key that you have plans to act fast and minimize the damage. Letting water sit in your building can do more harm than the initial flooding event, leading to structural weakening, water damage, and mold growth. To limit damage, you might want to have a restoration company’s contact information on hand.
“It is important to contract with a restoration company to pre-plan and eliminate red tape,” says Tom Head. “That allows you to define the exact services you need and to expedite response times when a loss occurs.” If you want to see how the restoration process works, see Blackmon Mooring’s resource on water damage restoration.
Does Your Commercial Property Insurance Cover Flood Damage?
Most standard Property Insurance policies don’t cover flood damage because it’s an unpredictable and costly risk. Unless you specifically asked for flood insurance, chances are your policy doesn’t offer it.
When buying small business insurance, check to see what flood coverage options are available. Some carriers may provide it and some won’t. You might also want to look into the National Flood Insurance Program (NFIP) for additional information.
With flood insurance, your policy may cover…
- Repairs and restoration to your building.
- Repairs and restoration to your equipment, inventory, and other property.
Reminder: Floods Can Happen Anywhere
If your business is located at the top of a mountain, you probably don’t need to worry about flooding (but avalanches, landslides, and bears are another thing). Otherwise, pretty much everyone is at some risk of being in a flood. You should consider…
- Whether you’re near a body of water (lake, stream, river, or coastline).
- Whether you’re in a 100-year or 500-year flood zone.
- Whether flash flooding occurs in your area.
According to the Insurance Institute for Business & Home Safety, proximity to bodies of water is the number one risk factor for flooding. Heavy rains, melting snow packs, and storm surges can raise water levels and submerge the surrounding area.
The NFIP maps out and defines some flood zones and gives some insight into the area’s risk:
- A 100-year flood plain has a one percent chance of flooding in any given year.
- A 500-year flood plain has a 0.2 percent chance of flooding in any year.
However, keep in mind that nature doesn’t play by the numbers all the time and the boundaries of these areas are often somewhat arbitrary.
Lastly, practically any area can be subject to flash flooding. Slow moving thunderstorms or heavy rainfall can dump water more quickly than the ground can absorb, leading to rapid flooding conditions. So even if you’ve set up shop in the middle of the desert, all it takes is one big storm to bring a flood to your doorstep. Be prepared so you can keep your business above water – literally and figuratively.