08 February 2016
Last updated at 11:06
News
Flood - the commercial impact
We asked environmental data specialists Groundsure and expert environmental lawyer Keith Davison from ELM Law, to explain the effects of recent flood events on local businesses.
December 2015 was the wettest, warmest December since records began in 19101. Storm Desmond hit at the beginning of the month, quickly followed by Storm Eva and Storm Frank. The most severe flooding occurred from 25-27th December across Yorkshire, Lancashire and Greater Manchester. It is estimated that the cost of these events will be between £5bn-£5.8bn.
In England and Wales approximately 185,000 commercial properties are at risk of flooding. In the 2013/2014 floods around 3,000 commercial properties flooded3 - and this figure will possibly be higher in the wake of Storms Desmond, Eva and Frank. Calderdale Council have already estimated over 1,600 business premises being affected. In insurance terms, the effects of the three 2015 storms have been atypical – PwC (PricewaterhouseCoopers) have observed that around 50% of claims will be from commercial businesses - traditionally these figures are between 10 and 30%. This is due to floods hitting towns and cities, thus affecting more small- and medium-sized businesses.
The average cost of flood damage to businesses is approximately £28,000- almost 4 times higher than the cost of a fire. With business insurance policies typically only covering damage to premises and stock, independent and smaller businesses may struggle to get back on their feet. Extra premiums are required for trading losses and this only when the insurance covers flood and is available. Excesses for a business in a low flood risk area can be between £100 and £250, rising to £2,500 for moderate risks, and up to £25,000 for areas with a history of flooding. With Flood Re due to launch in April 2016, it only poses a grimmer future for commercial premises which are excluded from this re-insurance scheme.
“If the PSG search alert system highlights the need for a flood search, always order one” – says Keith Davidson at specialist environmental firm ELM Law.
“Without a flood search, lawyers could face a negligence claim if their client’s home is destroyed or business needs to relocate.
Combined contaminated land and flood searches should be the standard choice for property transactions.”
The PSG range of products includes a wide choice of combined or standalone flood reports to meet the requirements of both residential and commercial property transactions. The search alert system on our online ordering platform PSG Connect uses industry data from a variety of sources to determine in the property in question in within a risk area.
For more information about our sophisticated online search alert system, visit www.psgconnect.co.uk/search-alerts.
For more information about flooding and how it can affect your commercial property please visit http://www.groundsure.com/help-support/understanding-flood-risk
References:
- http://www.metoffice.gov.uk/news/releases/archive/2016/december-records
- https://home.kpmg.com/uk/en/home/media/press-releases/2015/12/flooding-economic-impact-will-breach-5bn.html
- http://www.clarkhowes.com/blog/how-is-flooding-affecting-businesses-an-infographic
- http://pwc.blogs.com/press_room/2015/12/uk-flooding-pwc-updates-insurance-loss-estimates-from-storms-eva-and-desmond-and-comments-on-storm-f.html
- http://www.telegraph.co.uk/news/weather/12073205/UK-floods-by-numbers.html
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