The Most Common Hazard in the U.S.: Is Your Business Protected from Flood Risks?

This guide provides actionable suggestions and best practices—which include assessing flood risk, reviewing your insurance coverage and best safety procedures—for reducing the impact of flooding on your business.

Assessing Your Flood Risk

This section delves into the process of assessing your flood risk. Understanding your flood risk is vital for making informed decisions and taking appropriate actions to protect your employees and property. It also allows you to proactively mitigate potential damage and enhance your overall preparedness. Here are steps for assessing your flood risk:

• Check the FEMA flood map. This map provides information about areas with high flood risk and helps communities make informed decisions to reduce that risk. However, keep in mind that floods can be unpredictable, so there is no such thing as a “no-risk zone.”
• Learn the base flood elevation (BFE) for your property. Knowing your property’s BFE can help you determine if your building’s lowest floor is above or below the BFE. If it falls below the BFE, you may want to consider elevating your structure to reduce the chances of flooding.

Identify the type of flood events that could affect your business. These include:

• Aerial—This typically results from heavy rainfall or melted snowfall.
• Catastrophic—These result from an infrastructure failure, such as a dam burst, levee failure or water main break and the subsequent sudden release of thousands of gallons of water into the streets.
• Coastal—This is often the result of hurricanes or tsunamis. 
• Riverine—This occurs from overflow conditions affecting rivers, streams, lakes and other bodies of water, usually due to severe weather.
• Urban—This can result from blocked storm sewers and other drainage systems.
   
• Determine the lead time required to implement your flood plan. The lead time required will vary depending on the type of water source, ranging from several weeks for large rivers to very little warning for small streams.
• Identify the authorities responsible for monitoring water levels or rain intensity. Site management and the emergency response team should receive all notifications and warning services issued by this authority or agency.  

Learn the various flood warnings. The following warnings may be issued in the event of a flood:

Review Insurance Coverage

Flooding is a cause of loss that is not typically covered by commercial property policies; businesses usually need to purchase a separate flood insurance policy. Before catastrophe strikes, it’s important to take the time to conduct a detailed insurance policy review to ensure the coverage is adequate. In fact, if your commercial property is in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, you are required to purchase a flood insurance policy. Considerations when searching for a policy include:

• Policy limits: Are the building(s) and contents insured to value?
• Business interruptions: Is there coverage for a potential loss of income while the premises are unusable?
• Extra expenses: Is there coverage for any extra expenses incurred while operating the business out of a temporary location?
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Prepare Your Property

FEMA reported that more than 20% of flood claims come from properties outside of flood zones. This means it’s important to take precautions to protect your property before a flood occurs, even if your business is located outside a typical flood zone. Here are some tips to prepare your property for a flood:

• Create a flood plan that includes evacuation routes; crucial business details; gas, water and electric supply information; contact sheets for people and their responsibilities; inventory and electrical equipment details; and a list of disaster recovery companies.
• Create a data backup and recovery plan so critical business data is regularly backed up and stored offsite or in the cloud since data loss can severely impact business operations.
• Utilize dry floodproofing techniques, such as keeping flood-protective materials on hand, installing watertight shields over doors and windows, and implementing flood gates or permanent flood doors.
• Raise important equipment, electrical components and documents above expected water levels and store them in waterproof and fireproof containers if necessary.
• Landscape with native plants and vegetation to prevent soil erosion and allow flood waters to drain more efficiently.  
• Use flood-resistant materials for floor and wall coverings, insulation and building exteriors.
• Inspect the exterior building and roof/gutters regularly to ensure they can withstand wind and water from storms and flooding.
• Verify that all installed backflow valves and closures are functional to prevent chemicals, toxins and debris from entering clean water supplies.  
• Have backup systems such as portable pumps and alternate power sources located above the base flood elevation.
• Anchor fuel tanks to prevent damage to your building or other properties downstream, along with potential leaks, fires, explosions or pollution risks.

Protect Your Employees

In addition to protecting property, it’s important that your business takes steps to protect its people. Since flooding can spread quickly, advanced planning and preparation can help reduce the chance of injuries and even loss of life. The following actions can be taken to protect employees and others in the event of a flood:

• Designate worker roles so employees understand their functions during an emergency and know what is expected of them before, during and after a disaster.
• Establish communication procedures that include implementing an emergency notification system; creating a strategy for knowing who is in the building; appointing team leaders to communicate with and direct people in an emergency; and developing a list of external emergency contacts, such as the police.
• Prepare an emergency kit with items such as:
  • Flashlights
  • Radio
  • Sandbags, plastic sheeting and a loudspeaker
  • Copies of insurance documents and important phone numbers
  • Spare batteries
  • Medicine
  • Blankets, dry clothes and food
  • First-aid kit
  • Mobile phone
  • Extra cash
• Conduct regular drills to help prepare employees for what to do in the event of a flood. Training should include topics such as evacuation protocols, first aid and CPR, water safety, and recognizing and reporting potential hazards. Local public safety officials and emergency responders can observe, advise or participate in this training.
   

Conclusion

Being prepared for floods is essential for safeguarding lives and minimizing the impact of these natural disasters. By understanding the causes, recognizing the signs and knowing how to respond, your business can effectively navigate the challenges of floods. Return to this guide for crucial information on preemptive and response measures to take before, during and after a flood, with an emphasis on the importance of preparedness, communication and resilience.

While it may seem overwhelming, you can work with qualified insurance professionals to learn more about and assist with flood preparedness practices and policies. Contact us today for more information.