27-06-2007
Businesses in trouble following recent flooding
Businesses in the North and South West of England are once again counting the cost of severe flooding due to unseasonally bad weather conditions.
Insurance companies are estimating the cost of repairs and related business claims is running into the tens of millions. In just the 24 hours between 25th and 26th June, the cost is likely to be around £50 million.
Experts have suggested that the insurance claim for each business will be around £15-£20 thousand, totalling £200-£300 million by the time the final figures are released.
This is not to mention the loss of life, with at least 4 people who have perished as a result of the rising flood waters.
Depending on the damage, building repairs are costly and businesses will also have to deal with loss of profit due to closure and potentially from stock being ruined.
Angus Tucker, Director of Insurance Claims Solutions within Grant Thornton's Forensic and Investigation Services, noted that "while many businesses in the area will be covered by 'physical damage' and 'business interruption' policies for damage from [the] flooding, further problems will arrive if business owners are denied access to their premises by local authorities (i.e. Police/Fire) and therefore cannot trade. To be covered by such an eventuality, business owners are required to have purchased a far more complex and lesser known cover which is 'denial of access'."
Flooding not only has immediate effects, it also disrupts businesses in the long term. A building can take up to a year to completely dry, and may need to be stripped down to its basic structure in order to avoid health risks from water and sewage borne diseases taking hold. This means that the premises could be left empty for some time.
A business would have to find alternative premises, incurring extra cost, or close completely for the duration of the repairs. Without insurance it’s unlikely it could survive.
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© Rosie Beasley June 2007