58% of Cost of Extreme Weather Events to SMEs Not Covered by Insurance – Uswitch Reveals

Uswitch business insurance experts have looked into the effect of extreme weather events on small and midsize enterprises (SMEs), including cost, insurance payouts and whether they’re covered to make a claim.

The research revealed that businesses are often negatively impacted by unforeseen weather events such as floods, storms, extreme heat or snow.

Comprehensive business insurance policies that cover extreme weather events should be considered if you’re a small business owner who wants to protect themselves from any potential fallout.

UK flooding

One of the most potentially damaging extreme weather events to a business is flooding. Whether it’s property damage, disruption of operations or loss of inventory, flooding can put a serious strain in your small business’s profits. 

Uswitch found that in the UK:

What should you look for in an extreme weather event product?

Extreme weather event insurance typically covers damages caused by natural disasters such as hurricanes, tornadoes, floods, earthquakes, wildfires, and severe storms.

Here are some key aspects to consider when looking for this type of insurance:

  • Coverage for property damage. Ensure that the policy covers damage to your property, including your home, vehicles, and any other structures on your premises.
  • Personal belongings protection. Look for coverage for your personal belongings that may be damaged or destroyed in the event of extreme weather, such as furniture, electronics, and clothing.
  • Temporary living expenses. Some policies provide coverage for temporary living expenses if your home becomes uninhabitable due to extreme weather damage, such as hotel bills and food costs.
  • Liability coverage. Check if the policy includes liability coverage, which can protect you if someone is injured on your property during an extreme weather event.
  • Additional living expenses. This coverage reimburses you for additional expenses incurred while your home is being repaired or rebuilt, such as increased transportation costs or temporary storage fees.
  • Deductibles and coverage limits. Understand the deductible amount you’ll need to pay before the insurance kicks in, as well as any coverage limits that may apply.
  • Exclusions. Pay attention to what is not covered by the policy. Common exclusions may include damage caused by neglect or lack of maintenance, acts of war, or certain types of water damage.
  • Flood insurance. Standard homeowners insurance typically doesn’t cover flood damage, so having a separate flood insurance policy may be useful if you live in an area susceptible to flooding.

It’s essential to carefully review the terms and conditions of any extreme weather event insurance policy to ensure that you have the coverage you need and understand any limitations or exclusions. Additionally, consider consulting with an insurance agent or professional to help you navigate the complexities of insurance policies and find the right coverage for your specific needs.

Expert tips on how to protect your business 

Protecting your business from extreme weather is crucial for its survival and continuity. Uswitch business insurance expert Andy Elder gives his top ten tips to help safeguard your business:

  1. Insurance coverage. Having insurance against these sorts of events is one of the most important ways to ensure your business is protected from unforeseen events. If you needprotection against various types of extreme weather, such as floods, hurricanes, earthquakes, or wildfires, consider investing in a comprehensive insurance policy that covers this. Make sure you review your policy regularly to ensure it adequately covers potential risks.
  2. Risk assessment and planning. Failing to prepare is preparing to fail, so it’s a good idea to conduct a thorough risk assessment to identify potential extreme weather risks in your area. This enables you to develop a disaster recovery plan that outlines procedures to mitigate these risks and ensures business continuity.
  3. Backup data and systems. Implement regular data backups and store them offsite or in the cloud. This ensures that even if your physical premises are damaged, critical business data can be recovered, allowing operations to resume quickly.
  4. Secure facilities and infrastructure. Retrofit your business premises to withstand potential extreme weather events. This may involve reinforcing structures, installing storm shutters, or securing heavy equipment to prevent damage during earthquakes or floods.
  5. Emergency preparedness training. Train employees on emergency procedures and protocols to follow during extreme weather events. Conduct regular drills to ensure everyone knows their roles and responsibilities in case of an emergency.
  6. Communication plans. Establish communication channels to stay connected with employees, customers, suppliers, and other stakeholders during and after an extreme weather event. Utilise multiple modes of communication, such as email, phone, text messages, and social media.
  7. Alternative work arrangements. Develop remote work capabilities to allow employees to continue working from home if access to the physical workspace is restricted due to extreme weather. Ensure that necessary tools and resources are accessible remotely.
  8. Supply chain diversification. Diversify your supply chain by sourcing materials and components from multiple suppliers located in different regions. This reduces the risk of disruptions caused by extreme weather affecting a single supplier or region.
  9. Emergency supplies and resources. Maintain an emergency supply kit stocked with essential items such as food, water, first-aid supplies, flashlights, batteries, and generators. This ensures that employees have the necessary resources to sustain themselves during and after a disaster.
  10. Community engagement and partnerships. Build relationships with local emergency responders, community organisations, and neighbouring businesses. Collaborate on disaster preparedness initiatives and share resources to enhance resilience and recovery efforts within the community.

By implementing these tips, you can help protect your business from the negative impacts of natural disasters and improve its ability to withstand and recover from unforeseen events.