Sometimes When It Rains, It Pours. That’s Why Businesses Need Flood Insurance.
When floodwaters recede, business owners measure the aftermath in degrees of devastation. Some businesses survive. Some struggle to stay afloat. Others go under. For businesses attempting to bounce back from a flood, the outcome often comes down to planning. At times like these, flood insurance is a lifeline.
Flood risk is real. Retail, office and multi-unit residential properties were projected to lose more than $13.5 billion in 2022 from flood damage. In addition, those businesses were expected to be closed due to flooding for a total of 3.1 million days. About 25 percent of businesses never reopen after disasters.
Yet the numbers tell only part of the story. Flooding and flood damage can unleash a waterfall of setbacks that overwhelm businesses and sap their viability. At times, the strain is insurmountable. Some businesses are unable to overcome a flood’s cascade of challenges: suspended operations, curtailed revenue, staff losses, property damage, ruined inventory and unexpected recovery costs.
Businesses hit by flooding can survive. As the country’s largest single-line insurance program, the National Flood Insurance Program (NFIP) serves more than five million policyholders nationwide and provides almost $1.3 trillion in flood coverage, protecting buildings and property.
For many business owners, flood insurance is a smart and effective way to protect their livelihood against flood damage. Planning helps avoid the worst post-flood outcomes. The key is to take steps today to mitigate the flood-related consequences of tomorrow. Yet for some business owners, a murky understanding of flood risk stops them from taking sensible action.
Some business owners have a hard time accepting the severity of flood-related risk. They may believe that a business that hasn’t flooded in the past won’t flood in the future. They might conclude that they are safe from flooding because their business is located on a mountain, in a desert, far from a flood plain or miles from the nearest body of water. They may believe they are out of harm’s way because they’ve installed sump pumps, drainage ditches or hurricane windows. Efforts at mitigation are important, but they are only part of a comprehensive risk-reduction strategy.
When business owners underestimate flood risk, a false sense of security can lead to inaction that puts them at greater risk of flood damage. The truth is that every business is at risk of flooding. Any place it rains it can flood; 99% of counties in the United States have experienced floods since 1998. Flood insurance is a business tool for managing risk. Unlike most unpredictable events that harm businesses—from economic recession and restrictive regulations to shifting consumer demand and supply chain disruptions—businesses can protect themselves from flood damage with easily obtainable insurance.
Remind business clients that NFIP is there when they need it—but only if they have flood insurance.