Minimizing the impact of retail store flooding

Floods impact many businesses with premises on floodplains. Having the right emergency response plan in place can minimize losses and prevent prolonged business disruption, as one UK high street retailer discovered when rising waters threatened three of its stores.

The retailer contacted FM Affiliated after the first location started to flood. Water levels were still rising, and the team told us they had two more stores within the area that would likely be affected. We dispatched our adjusters immediately to assist with and expedite the response efforts.

How we minimized the business impact

We advised the client to move stock, POS equipment, and any other moveable contents out of harm’s way, confirming that there was no need to wait for our loss adjuster to be on-site to begin loss mitigation.

An FM Affiliated loss adjuster arrived the same day to provide hands-on support with loss mitigation measures, including sandbagging and stock separation. We worked with the client to determine the extent of damage and agree the scope of repairs and replacements. We provided a list of restoration contractors to assist the client with the cleanup and ensured help was on-hand to oversee the works.

FM visited the retailer’s head office within a week to talk through the mitigation efforts to date, discuss timelines and business impact, and recommend that a cost center was created to track all costs relating to the loss. Our ability to make on-the-spot agreements empowered the client to take the decisions that would get them back in business as fast as possible. Recognizing this would cost more in the short term, we knew it would benefit both parties in the long term.

Two weeks after the initial flood event, we calculated that the loss would exceed $1M and informed the broker we wished to make an advanced payment. The broker suggested $250K would be acceptable. But after further discussion, we opted to approve $400K to speed the recovery efforts along—all before the client had even asked for an interim payment.

As a result of these steps, we had a clear and agreed plan for settling the loss, and all parties understood their roles. A fair and prompt settlement was achieved much more quickly than would otherwise have been the case.

Lessons for brokers

• Be prepared. Floods happen, but you get some warning. Agree a response plan with your clients to reduce the impact, taking reasonable steps such as moving stock to minimize damage, ensuring sandbags can be accessed, and isolating power to all electrical equipment.
• Respond quickly to minimize the impact. Ensure affected sites are visited quickly. Remove stock, fixtures, and fittings above the waterline to avoid damp. Loop your client’s insurer in quickly to get best-practice advice and expedite the flood response.
• Choose the right insurance partner. You need best-in-class claims services when the worst happens. The right insurer will be available ahead of time to facilitate effective flood planning, streamline flood responses, and provide the support to get your client’s business back up and running ASAP. Find out more about the FM Affiliated claims advantage here.

This is the nineth in a series of articles FM Affiliated is producing to help brokers understand the value we can provide to their commercial property insurance clients. Look out for the next post in this series for more valuable insights.