Following heavy storms this winter, many parts of the U.S. are now bracing for flooding as the snowfall melts. NOAA forecasters are warning the worst is yet to come as almost half the country has an above-average risk of flooding over the next several weeks, according to the annual spring outlook released by NOAA’s National Weather Service. 

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

• Avoid building in a flood prone area.
• If location is in a flood prone area, contact local government authorities—and the Army Corps of Engineers, where possible—to ensure compliance with local building codes and to see if mitigation efforts (i.e., levees, floodwalls, etc.) exist in the community.
• Build with flood-resistant materials, such as concrete walls, metal doors, and metal, water-proof storage cabinets.
• Reinforce the structure and elevate the building’s main breaker, fuse box, and utility meters.
• Remove valuables and essential records from basements or other flood prone areas; store above expected flood levels or off-site.
• Install an emergency generator in case of power outages, which can be used to speed the recovery process and restore business operations more quickly.
• Create a disaster contingency plan and share with all relevant employees and business contacts.
• Backup vital company records, ideally at an off-site location.
• Purchase flood insurance. Typical commercial property policies exclude coverage for damage caused by flood; consider the National Flood Insurance Program (NFIP) or another risk transfer alternative.
• Identify colleagues who will be responsible for gathering the data necessary in the event of an insurance claim, and provide them with adequate training on what records will be required. Appoint a key contact to communicate with your claims adjuster.
  

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.

To learn more, please contact your local Marsh representative or:

Patrice Collingwood
Flood Service Center Practice Leader
+1 210 691 4106
patrice.a.collingwood@marsh.com 

Abid Kermani
U.S. Property Practice Midwest Zone Leader
+1 313 393 6757
abid.m.kermani@marsh.com

Pat Hennessy
US Property Practice Northeast Zone Leader
+1 212 345 3626
patrick.j.hennessy@marsh.com