Small business insurance and flood insurance

You cannot have failed to notice the very bad weather in the first half of this year. No matter what you might think of the idea of global warming or climate change, there’s no disputing the incredible amount of water that’s been falling from our skies. Most recently, Hurricane Irene came ashore on the eastern seaboard. It seemed to bring half the Atlantic with it judging by the worst flooding in centuries and the mudslides that hit upstate New York, New England, and Vermont.

As a matter of direct damage, thousands of home and business owners have suffered severe losses through physical damage to the properties and surrounding land, and then of the contents including vast amounts of raw materials and stock-in-hand. It will be some time before we can put a global number on the total losses from this one event, but one thing is already clear. Total insurance claims are already record-breaking with 2011 on track to be the most expensive year of all time, allowing for inflation. The only good news in all this is that, with the advance warnings given by the weather forecasters, there were only a few deaths. In the early part of last century, several thousand could die because they had no warning of a hurricane’s approach.

We now come to an unexpected contribution to the disaster from Washington. You would imagine our politicians would be queuing up to fund FEMA and make relief funds available to all the communities suffering the worst losses. Yet, the GOP is playing politics, insisting all increases in funding be matched by cuts in spending. At a time when we should all be good neighbors, it seems our political divides grow ever wider. The most immediate threat is to the National Flood Insurance Program. There’s every sign funding may end at the end of September. If this happens, thousands of property owners will discover their coverage ends. This will put them in breach of the terms of their mortgages. Although it’s unlikely the banks and finance companies will foreclose — after all, there are no private insurance companies lining up to sell flood insurance — everyone will now look at the weather forecasts more carefully. The word already is this will be a busy hurricane season. Without national flood insurance in place, the losses will fall on the federal post-disaster assistance funds — the funds the GOP is holding hostage for matching cuts in other government departments.

So if the the worst happens, there will be no new mortgages or loans offered until flood insurance returns. Indirectly, this will affect every business. If home owners worry they are uninsured, all discretionary spending may be cut back. Prudence says you need cash in hand to repair flood damage. No one new will move into your neighborhood. If it goes on for any length of time, people may move away from the flood plains. These are your customers and clients. So not only may your own business insurance rates rise, but the level of trade may also drop. It’s a double whammy! Further all taxpayers may be looking at bigger bills if both state and federal governments are to make adequate provision for future weather disasters. It’s definitely time for you to sit down and discuss this issue with your business insurances advisor.

Leave a Reply

Your email address will not be published. Required fields are marked *