Flooding is the number one natural disaster in the United States, affecting thousands of homeowners and businesses annually. Floods are typically caused by excessive rain or snow fall, tropical storms or hurricanes, dam or levee failure, flash floods, and construction/development issues, among other causes.

Flooding is a universal peril that can have dramatic consequences for businesses of all types. One out of every four businesses that close their doors during a disaster—such as a flood—never reopen them, according to FEMA. Even if the damage is not severe, loss of or damage to product inventory, raw materials and/or essential records and files or power outages may delay the return to normal operations. It is essential that all businesses, regardless of location, prepare for and protect themselves against the risk of floods.

While there is no way for a company to completely remove the threat of a flood occurring, there are several low-cost mitigation techniques a business can employ before, during, and after a flood that may help minimize the impact on business operations.

Before a Flood

• Activate your Business Continuity Management procedures. Assemble emergency response teams to review plans and decision timelines.
• Identify any suppliers that might be affected by the floods, review contingency plans, and make alternative arrangements as needed.
• If a decision is made to close a facility, check the availability of key personnel and agree on when to close the facility and the time required to shut down operations and evacuate personnel. To ensure safety of personnel, no-one should be allowed to remain on site unless approved by local authorities, and personnel should stay clear of low-lying coastal areas. Remain in contact with employees and ensure that contact lists are current.
• Relocate, as required, any hazardous materials that could react with water.
• Identify, back up, and/or relocate vital records. Cover valuable equipment, furniture, and other property susceptible to water damage.
• Check all emergency and communications equipment, including generators and radios. Ensure that generators will start automatically and that power transfers properly. Fill oil and fuel tanks to capacity. Verify that all fire protection equipment and systems are in service.
• Follow local media reports to stay current with the flood’s progress and any advisory and mandatory evacuation orders.
• Address access to your site after the floods recede. In extreme conditions, this will be controlled by public authorities. Assemble supplies for the emergency response team.

During a Flood

• Notify your insurer(s) and Marsh as soon as possible of the event.
• Keep abreast of developments via the National Weather Service, local community agencies, and/or local news.
• Where time permits, move raw goods, inventory, files, and other essential items (i.e., computers) away from ground or basement levels and to an upper floor.
• Stay clear of streams, brooks, and other areas prone to flooding.
• When instructed to do so, turn off utilities at the main switches.
• Enact disaster contingency plan and alert all employees and business contacts.
• Identify and capture all costs associated with your insurance claim. Examples include protection and preservation, temporary repairs and replacement, and extraordinary and expediting expenses.

After a Flood

• If there is significant damage to the structure, turn off the electricity and other utilities, regardless if the power is on or off in the community. Turn it back on when the structure is dry enough.
• Take caution when entering buildings to avoid hidden damage, such as a weakened foundation.
• Assess any damages and contact insurance claims personnel as soon as possible.
• Record evidence of damage, including photographs and/or video.
• Establish a flow of communication between employees, insurers, and claims professionals.

Flood Insurance

One of the most important mitigation strategies businesses can take to protect themselves against flood—especially those in flood-prone areas—is to purchase insurance. In the U.S. most flood insurance is sold through the NFIP, the government-backed national flood insurance program. NFIP is a federally-funded program that provides coverage for building and contents for both commercial and residential buildings. There are two types of risk: moderate-to-low and high risk locations. Structures located in the moderate-to-low hazard areas may qualify for the NFIP Preferred Risk Program, which offers the lowest available premiums in these areas.

Marsh’s Flood Service Center has the ability to place up to $16 million in limits in excess of the NFIP, including coverage for business interruption. Since many of the costs associated with such an event can include costs to resume business operations—or the potential income lost as a result of interrupted business operations—many companies benefit from such additional coverage. Alternative programs options are also available; coverage is comparable and prices are competitive with the NFIP and most businesses qualify for coverage. Coverage availability and pricing varies and is based on each individual insured’s portfolio.

If you face flooding concerns, Marsh’s Property Practice and Flood Service Center experts can work with you to determine the insurance and risk management options that best fit your needs. In addition to coverage available through the NFIP, many businesses can also benefit from business interruption insurance and other alternative program options. In addition, Marsh’s dedicated property and claims professionals are experienced in successfully handling flooding claims and can assist you in all facets of the process, from pre-loss preparation strategies through the settling of a claim.

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