The recent flooding in Texas has hit local businesses hard as they try to recover, costing them money for the clean-up process and lost business.
Few of the businesses in the up-until-now drought-stricken area carried flood insurance according to local news reports, and they’ll end up footing the bill themselves. The flooding in Texas shows that it can happen anywhere, and that some areas in most states are prone to flooding, including California.
But there is a stark reality with every flood: 40% of businesses affected by a natural or human-caused disaster never reopen. By preparing your company now for a potential disaster later, you can help reduce the impact any catastrophe will cause and ensure your business recovers quickly.
Federal law requires homes and buildings in flood plains to carry flood insurance, but only if they have a mortgage from a federally regulated or insured lender, according to the National Flood Insurance Program (NFIP). Those living outside of high-risk flood plains are typically not required to carry it.
Typically, homeowners can only buy flood insurance through the NFIP, but businesses do have other choices.
The best way to keep your business afloat after a flood is to be prepared in advance for the unthinkable. You can start by:
1. Understanding your risk. Your local county should have on its website a list of areas identified as flood plains and floodways, as defined by the Federal Emergency Management Agency (FEMA). By knowing which areas are prone to flooding, you can better understand how your business might be affected in the event of a large rainfall.
2. Purchasing flood insurance. Most commercial property insurance policies may not include flood coverage as part of the package. Talk to us so that we can explain what these policies entail and how you would be covered. There are two options for flood insurance:
• The NFIP, which will insure a commercial building up to $500,000, and the contents of the building up to the same amount. Insurance premiums vary depending on the location of the property and its risk of flooding.
• A flood policy from an insurance company. These policies will often provide larger limits, as $500,000 is often not enough for most businesses should they be hit by a flood. Call us for details.
3. Establishing an emergency plan. Establish an emergency plan that details how things will proceed in the event that your facility is forced to close due to flooding. Consider the following and include them in your plan:
• Will your employees work remotely, and do they have the resources to do so?
• Who will be coordinating with your staff during an emergency?
• What procedures must you put in place to keep your business functioning?
• How will you communicate and share information with your team?
• Will affected employees be given time off? If so, how much?
• Do you have a backup of essential files and records?
• What will you do if your building is closed for a long period of time?
• Do you have alternative sites to move inventory to, and from which to work?
Share this plan with employees so that everyone knows what to expect.
4. Taking advantage of community resources. Familiarize yourself with community resources in place to help businesses during emergency situations.
In the wake of many floods, the U.S. Small Business Administration has set up business recovery centers to assist companies trying to recover.
Also, if you need to, you can apply for federal assistance on FEMA’s website, where you can also find information on other recovery resources.
Finally, Coremark Insurance Services can help you decide if a commercial flood policy might be in your best interest. Call us!