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Commercial Water Damage and Insurance Claims – Your Step By Step Guide To Getting It Right

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Escaping water is one of the biggest causes of commercial insurance claims.  Not only can water cause damage to property, stock and equipment, but the loss of revenue caused by the interruption to business can also have devastating consequences on an organisation’s bottom line and cash flow.

In this article, we aim to let you know the best way to protect your enterprise from water damage.  We will also discuss the foremost steps to take to get your business up and running again after water damage has been suffered, including dealing with insurance claims.

Types of Water Damage

When thinking of water damage, the first thing that pops into most peoples’ minds is damage caused by flood water.  In 2012, the UK experienced its wettest year since records began, resulting in an estimated £84 million worth of damage to commercial properties.  Up to £33 million was also lost in related economic costs such as lost working days, and a further £82 million of costs followed from the resulting infrastructure disruption.

However, aside from the dramatic event of a flood, other more mundane causes of water damage can result in devastating amounts of damage to commercial properties and their contents.  Examples include:

  • Faulty sprinkler systems          

  • Burst water mains         

  • Poor drainage         

  • Blocked toilets, pipes, sinks, dishwashers, etc

 

Protecting Your Business from Water Damage

Flooding

Although it may require an initial investment of funds to protect your premises from flooding, consider the following statistics:

  • Around 185,000 commercial properties are at risk of flooding in England and Wales         

  • The average losses caused by flood damage are £28,000 for a business, compared to £1,033 in the case of a burglary         

  • According to the Environment Agency, most businesses can save up to 90 percent on the cost of lost stock and moveable equipment by taking action to prepare in advance for flooding.

If your area is at risk of flooding, you will normally receive notice in advance that a flood is imminent.  It is imperative, therefore, to have a detailed Flood Plan drawn up so your staff are aware of the actions they need to take in the event of a flood warning to move and protect stock, machinery and equipment.

You can also install permanent or removable barriers to hold back flood waters of up to one metre, and buy you time to take the steps highlighted in the company Flood Plan.  Sandbags can also offer additional protection and always ensure you have a good supply of disinfectant available.

It is also vital to be organised regarding your administration.  Backup company files and store these off the premises, as well as ensure your insurance policy is up-to-date and in place you can retrieve it easily.

Other Sources of Water Damage

To protect your business from other sources of water damage such as burst pipes etc it is important to take the following steps:

  • Ensure your drains, pipes and appliances are regularly checked for faults and properly maintained          
  • Insulate pipes that are exposed to very cold temperatures          
  • Consider installing a water leak detection system

Recovering after Water Damage Occurs

If your business has suffered from water damage, there are some steps you can take to ensure your business activities resume as soon as possible and reduce the impact on your customers and revenue flow.

Business Interruption Insurance

Business Interruption Insurance is a type of insurance that comes into play following a claim made upon your building or contents insurance, and covers financial losses that are a direct consequence of a business interruption, such as loss of revenue, loss of rental income and additional staff costs.

It is a common misconception that other insurance policies such as contents and building insurance will cover them for the losses suffered due to lack of ability to operate and trade.  Unfortunately they will not, and many commercial operations collapse following major water damage if they fail to have a business interruption insurance policy in place.

Loss Assessors

Hiring an independent Loss Assessor can assist businesses in achieving the right level of compensation from an insurance claim.  Unlike a Loss Adjuster, who is engaged by the insurance company,  a Loss Assessor will act on your behalf to assess damage to the property, ensure the correct claim is made and that you won’t be held liable for any unjust expense. 

Obtain Independent Legal Advice

An independent legal advisor can assist you with interim fact finding, liaising with Loss Adjusters and negotiating settlements with insurance companies.  A legal professional can also advise you if you and your insurer become involved in a dispute over a claim for water damage.

In Summary

The commercial losses suffered by businesses due to water damage can be catastrophic; however, by investing in proper preparation and prevention measures, procuring the right type of insurance and obtaining professional advice if disaster strikes, you can minimise damage and get your business up and running again as soon as possible.

To find out more about commercial water damage claims, please see our  property damage pages,  or phone our London office on 0207 993 6960, to speak to one of our solicitors.

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