Protecting your property from a flood

The change in weather patterns increases the risk of flooding in the UK. Flooding is now the most widespread natural disaster in the UK. With losses suggested at around £958m a year, the Association of British Insurers (ABI) and Flood Re recently underlined the importance of maintaining flood defences.  

Since 1998 there has been at least one severe flood every year. The Association of British Insurers (ABI) shows that the February storms generated approximately 177,000 claims, costing £500m.  

The Environment Agency’s (EA) report, Living Better with a Changing Climate, also warns that the UK is underprepared for the current physical impacts of climate change. Businesses are more likely to be flooded than destroyed by fire, so preparing for this risk is an urgent priority for commercial property owners. The EA advises companies to put flood strategies in place that both reduce the impact of floods in the future and adapt to the inevitability of climate change the country is already facing. 

Weather-proofing businesses  

FloodFlash reports that most surveyed businesses have measures in place, with just 8% claiming they’re unprepared for a flood. Nearly three-quarters of companies surveyed (69%) said they’re concerned about the impact of flooding on supply chains and 80% are open to flood technology solutions if correctly applied. Most respondents agreed that they would use technology-based insurance also.

What are the risks of different types of flooding?  

According to FloodFlash, surface water flooding is the most significant flood risk facing British commercial properties. Business properties are two times more likely to be at risk from flooding than the average British property. Furthermore, 20% of UK commercial properties are at risk of flooding from more than one source, meaning they have an even greater need for flood prevention strategies.  

Surface water flooding 21% (346,719 businesses at risk) – Surface water flooding or “flash flooding” is caused by intense localised rainfall and can occur inland, away from any rivers or other sources of water.  

River flooding 8.82% (144,789 businesses at risk) - River flooding happens when a river (or similar body of water) bursts its banks; this occurs when more water runs through a river basin than usual and can be caused by intense storms or snow melt. 

Coastal flooding 1.9% (31,236 businesses at risk) - Coastal flooding affects communities on Britain’s coasts and is influenced by tidal surges, changes in sea level, and intense storms. This type of flooding can happen very quickly and causes a lot of damage to property due to the salt in the water.

Commercial property has the highest risk of flooding 

The FloodFlash Commercial Risk Report 2021 states that commercial buildings face a higher risk of flooding than any other property type. The report says that 26% of commercial property in the UK has at least some level of risk of flooding compared to 14% for all other property. Many commercial properties are built near water sources because, historically, they’ve had access to waterways. Industrial buildings such as warehouses and sports grounds are often built on low-lying land, which unfortunately increases the flood risk for these properties. 

Which commercial properties are most at risk? 

Over half of all commercial properties (53%) at risk of flooding are in the retail or industrial sectors. Retail and manufacturing comprise 32% and 21% of all commercial properties at risk. They are followed by offices (11%), general use (10%), and utilities (6%). 

In terms of geographical location, Greater London has the highest number of commercial properties in the 200-year flood zone (41,946), with over four times the properties at risk than the second place Manchester (10,024). 

Grant Martindale, Head of Broking, Corporate said:

“We can arrange flood cover even for complex cases and for businesses that have had difficulty securing this flood cover in the past.”

How can commercial property owners prepare for bad weather? 

• Risk managing flood defences - Review insurance cover and assess whether the property is prepared for a flood. What impact would this have on normal business operations if the premises were unusable due to flooding or critical equipment was damaged? Does the current flood risk level match the insurance cover for the property? 

• Check the flood risk – Property owners can find the level of flood risk for their premises on the UK Government’s flood risk map at flood-map-for-planning.service.gov.uk. Confirm the location to see the likelihood of flooding and download the map and guidance information. 

• Sign-up for flood alerts – Register to receive flood alerts for the property address at www.gov.uk/sign-up-for-flood-warnings, to help prepare for the unexpected. 

• Prolonged Business Interruption - Water damage can be challenging and time-consuming to repair. While a minor flooding event may take hours or days to clean up and dry out, a severe incident can have disastrous consequences for a business’s ability to operate and potentially cause weeks or even months of extreme disruption. The effects can be far-reaching, from access issues to restricted turnover, equipment damage, and stock loss. Property insurance usually includes flooding, but it doesn’t always cover the level of business interruption insurance (BI) that a business could experience in the weeks and months following severe flood damage. Contact a broker or insurer to arrange the correct level of cover.

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Kerry London is authorised and regulated by the Financial Conduct Authority. The company is a leading UK independent and Lloyd’s accredited broker, which means that we work with a wide range of niche and major insurers.

This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such or regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note, we have relied on information sourced from third parties, and we make no claims as to the completeness or accuracy of the information contained herein. You should not act upon information in this bulletin nor determine not to act without first seeking specific legal and/or specialist advice. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to the fullest extent permitted by law.

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