Floods are a natural phenomenon that we as humans will never be able to fully prevent. Our actions can even increase the risk: think of climate change, inadequate river management, and construction activities in flood-prone areas. The extent of the damage caused by floods is also increasing, as more and more people and buildings are located in these flood-sensitive zones. Fortunately, the consequences of a flood can be insured.
Insurance for material damage
The Fire insurance Special Risks* generally covers material damage caused by fire, explosion, lightning, storm, labor disputes, and so on. It can also be extended to include a Flood cover. This coverage is not included as standard and must be explicitly added.
Flood damage is usually limited to a certain percentage of the insured sums for buildings and contents (whether by location, claim, and/or insurance year). A risk analysis is therefore necessary to determine an appropriate limit. The location of the risk, prevention measures, and insured capital are decisive factors here.
Business interruption insurance
Floods not only cause material damage. They can also halt business activities, with all the financial consequences that entails: you suffer a loss of revenue while your fixed costs continue as usual. This so-called business interruption can be insured, but this coverage must also be >explicitly included in your policy. A standard business interruption insurance only steps in if a covered material damage event is the cause.
To receive compensation for the financial consequences following a flood, the Flood cover must be included for both material damage and business interruption in your industrial fire insurance.
The role of your broker
As previously indicated, a thorough risk analysis is necessary to tailor the limits in your insurance policy to your specific needs, so you can be adequately compensated in case of damage. It is our job to accurately assess your needs and place your risk with the insurer that offers the best terms at a fair price.
Due to last summer's flood disaster and climatic changes, insurers will undoubtedly focus more on the conditions under which they offer Flood cover. This will likely lead to in-depth discussions in which we as brokers will represent our clients' interests.
For more information and personalized advice, you can always contact us.
*"Special Risks" Fire insurance refers to situations where the risk exceeds an insured capital of €1,356,473 (at index 684), or €43,633,225 for certain assets such as apartment and office buildings, farms, sports centers, hospitals, museums, and so on.
