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When it comes to insurance, flood has always been a confusing and problematic issue.
In recent years this confusion has been cleared up for home insurance, but for business insurance it remains an issue.
Before we get into this topic it’s important to understand what the issue with flood insurance is.
Many people believe that their insurance covers them for all natural events. So when their house gets flooded, they believe that their insurance should cover them.
It’s a reasonable expectation, but unfortunately many insurance companies did not actually cover flood damage for homeowners until very recently.
Storm damage was fine, as was flash flooding in most cases, but if it was a rising creek or river that caused the damage they would not be covered.
Sound confusing? It certainly was for many home owners, and it led to a lot of heartache and financial loss.
Thankfully most of the big insurers have now included full flood cover as standard in their home insurance policies, but sadly the business insurance sector is still lagging.
Business Flood Insurance
The good news is that some insurers have come to the party and offer full flood insurance coverage for business owners.
The not-so-good news is that it’s not something which is plastered all over the front of the policy, so if you want to know whether or not flood is covered you need to delve into the policy wording.
We recommend using an insurance broker who will know which insurers do and don’t offer flood cover, and can research any additional policies which they are not familiar with.
If you prefer not to use a broker, then you’ll need to be prepared to read through the Product Disclosure Statements and policy wordings to work it out for yourself.
Be warned though, because it’s not always easy to understand the fine print on exactly what forms of flood damage are covered.
Earlier this year one of the brokers we partner with was involved in a claim for a business that was damaged in the 2013 Laidley floods.
To protect their privacy we can’t say exactly what type of business it was, but they have a retail presence on the main street of Laidley.
The business was inundated with water and suffered considerable damage, and as a result of the damage the business was unable to trade for a period of time.
Thankfully the business owner specifically asked the broker for flood cover when taking out the policy, and the broker obliged by arranging suitable cover.
The business owner was paid a considerable sum as a result of the claim and was able to have the premised renovated and reopened, and by all accounts is now doing quite well.
If the business insurance policy did not cover flood damage, as most don’t, the business owner would not have been able to claim and would have suffered considerable losses.
This case study shows not only the benefits of taking out a policy with proper flood cover, but also of using an insurance broker who knows what they’re doing.
Risking it without flood insurance
Plenty of businesses take the risk of not having flood insurance. This is by choice in some cases, but most of the time it is due to a lack of understanding of what their policy actually covers.
If your policy does not offer flood cover the simple fact is that you will not be protected if your business is damaged due to rising water.
You may feel that your business is located in an area that would not be affected by rising water, but plenty of people have made this mistake before and suffered the consequences.
If you’re unsure whether or not your existing business insurance covers flood, we strongly recommend that you contact your broker or insurance company.
If they can’t help you, contact us and we’ll put you in touch with one of our brokers who can review your cover and made suitable recommendations.
We can also assist when insuring a new business to ensure you are properly protected from flood damage from day one.
Hopefully one day flood insurance for business will be as straightforward as it now is for homeowners, but until then it pays to be vigilant and seek professional advice.