El Niño is Coming! Have You Protected Your Business?


By Carl Santa Maria, CPCU

After five years of drought, the risk of flooding is not likely top of mind for business owners in the Western U.S. But with a wet El Niño weather system on its way, flooding is a very real risk this year.

According to FEMA’s National Flood Insurance Program (NFIP), individuals and business owners should prepare for the possibility of flood damage caused by the heavy rains typically associated with El Niño. The fact that we have been in a prolonged drought actually makes the risk greater as the ground is hard and parched, making it less able to quickly absorb moisture. This increases the chances of flash flooding during heavy rain storms. And in areas damaged by wildfires, the risk of mud slides is increased because the plants that stabilize soil have been destroyed.

If you haven’t acted to protect your business, here are some facts to consider:

  • Between 2010 and 2014, the average commercial flood damage claim was $89,000, according to NFIP.
  • Of all businesses affected by disasters such as floods, 25 percent never re-open.
  • More than 20 percent of claims on NFIP policies are for properties outside of mapped high-risk areas.

FEMA recommends the following actions to prepare for flooding:

  • Purchase a flood insurance policy if you do not already have one.
  • Review your current insurance policy; become familiar with what is covered and ensure the limits adequately protect your building(s) and equipment.
  • Make an emergency kit, plan evacuation routes, and keep important papers in a safe, waterproof place.
  • Itemize and take pictures of possessions.

All basic flood insurance is underwritten by the U.S. government through NFIP, with excess coverage available through commercial carriers. As with any type of insurance, risk is a primary cost factor. To understand your risk, check FEMA’s Flood Insurance Rate Maps (FIRMS). FEMA has mapped the entire country based on flood risk, and these ratings heavily dictate insurance rates. Another pricing factor is the FEMA Community Rating System (CRS), which sets rate discounts based on individual communities’ actions to prevent flooding. Both FIRMS and CRS are easily searchable on NFIP’s FloodSmart.gov website.

Forecasters are predicting a very wet season that will provide some relief from the drought, but will also increase flooding risks. Regardless of your risk profile, talk to your insurance broker as soon as possible about protecting your business from flood damage.

Carl Santa Maria is Chairman and CEO of Santa Maria & Company (SMC), a risk management consultant and commercial insurance broker in the San Francisco Bay area with deep expertise helping companies protect what is most important to them: their assets, their employees, and their futures. Contact SMC at 925-956-7600 or online at www.smcrisk.com.

Santa Maria & Company:  Experts in Risk Management and Providing Peace of Mind