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With the recent heavy snow endured by the majority of the UK and the impending flooding which will affect thousands of businesses across the region, Black Country law firm George Green LLP is advising all occupiers of commercial property to check their own or their landlord’s insurance for flood cover.
It seems West Midlands’ businesses must almost inevitably be prepared for more and heavier flooding over the coming years, according to Shilpa Unarkat, an associate in the Commercial Property Team in the Cradley Heath offices of George Green.
She says: “Those businesses which avoided the horrendous flooding on this occasion, may not be so fortunate in the future, despite the best efforts of the Environment Agency or any flood defences deployed.
“Tenants of commercial property can be especially badly affected. If their lease does not oblige their landlord to insure against flood risk and the landlord has not obtained insurance cover for flooding, the tenant will have to repair any damage caused by flooding (under the repairing covenant in the lease).
“In addition rent suspension provisions in the lease may not apply for flooding. In other cases, the rent suspension provisions could suspend rental payments while the premises cannot be used or occupied as a result of damage or destruction by insured risks.
“However if the premises are not insured against flood risk, the tenant will have to continue paying the rent to the landlord while it is not able to make use of the premises,” explains Mrs Unarkat.
“So as well as checking its flood cover under the buildings insurance, tenants should also consider business interruption insurance.”
According to Mrs Unarkat, when looking for new premises commercial occupiers need to be more aware of possible flood risk.
She says: “Environmental Searches should be undertaken as a matter of course. The searches will identify whether the property is within 250 metres of a floodplain, as well as details of other natural hazards, and will alert the solicitor to make further enquiries, for example via Floodline or on the Environment Agency website to find out which areas are likely to flood. Additional enquiries should be made of the vendor or landlord in respect of the insurance cover for flooding and knowledge of past incidents of flooding.
“In future there will be little excuse for businesses to be caught out by floods. If they cannot obtain sufficient insurance so that they can survive a flood, they have to seriously consider if they are trading from the right premises and, if possible, look to move elsewhere.”