Towns could be wiped off the map unless urgent measures are taken to ensure businesses in flood-hit areas are able to gain insurance, an expert has warned today.
Thousands of small and medium-sized businesses (SMEs) are reeling from the devastating floods which have hit large parts of Northern England including Cumbria, Yorkshire, Lancashire and Greater Manchester.
While homeowners are able to take advantage of a new facility called Flood Re – www.floodre.co.uk – it has not been extended to the business community.
Business owners across Yorkshire are now faced with the bill for the devastation the flood has caused.
Flood Re has been developed by the Government in conjunction with the insurance industry. It will be in place for 25 years and aims to enable flood cover to be affordable to households at the highest risk of flooding.
However, Stuart Bennett, a director of SME online insurance specialist Quote Dave says without businesses towns will struggle to exist.
Mr Bennett said: “Businesses have been excluded from the list of those eligible to benefit from the setting up of Flood Re.
“This means that unless flood defences are significantly improved to prevent recurrences then it is difficult to see how businesses could continue to trade as they could be uninsurable for flood. What bank would consider lending to a business that was uninsurable? Would entrepreneurs invest their own money knowing that it was not protected by insurance or would they simply choose a different location for their business?
“The knock-on effects would be catastrophic in all sorts of ways including the impact on house prices locally if there were no businesses and no jobs nearby.”
He said another issue facing businesses coming to terms with flood devastation was underinsurance.
Underinsurance can result in inadequate claims settlement or no claims settlement at all.
Mr Bennett said: “Many of the businesses in flood hit regions will be unable to trade for a considerable period of time. Having the right insurance in place is vital during a period of business interruption because it helps to ensure that business bills are paid while it cannot trade normally.
“The flood devastation over the last month has highlighted just how important it is to have the right insurance in place and not just the cheapest quote. Insurance has become a commoditised product often with the emphasis on price.
“Our advice to businesses is to spend 20 minutes checking their own policy today – if they think there are any gaps or the sums insured or indemnity periods are wrong then they need to ensure they are corrected. If a loss does occur, you do not want to be hoping that the loss is covered.”
David Hawkes, who owns Autopfect Garage on Kirkstall Road, which was due to open in January before it flooded, said: “Things have got to change. If this happens again, business owners and investors like me will move out of Leeds.”