Scotland’s unpredictable weather means adequate insurance for hospitality businesses is absolutely vital, writes lawyer Sandra Jones
Large parts of Scotland have been battered by storms and extreme weather in recent months, with some areas experiencing devastating floods.
Many Scottish hospitality businesses are, therefore, counting the cost of the damage caused.
With extreme weather seemingly becoming increasingly common, many of those affected by – or those potentially at risk of future – flooding may be wondering what steps they can take to protect their businesses.
The hospitality industry is particularly vulnerable, given that the premises are often the very foundation of the business. It’s hard for a pub or a restaurant to trade from a different location while the business recovers.
So are you at risk?
It is important that you find out. It could save you money, minimise the damage to your property and could even prevent the risk of injury or worse.
Risk to properties may not be immediately obvious, in that the property may not be located in a waterside or coastal location; but it is vital that owners and occupiers inform themselves as to the risk of flooding.
Useful information is available from a variety of sources, including the Scottish Environment Protection Agency. If considered justified, a professionally undertaken flood assessment can be obtained.
If your business is flooded, it can be costly, not only in terms of money and time but also inconvenience and heartache.
Whilst it is impossible to completely flood-proof your premises, there are a number of measures that can be put in place to reduce the impact of flood damage.
Firstly, protect your property.
Whether you own or rent your business premises, there are steps that can be taken to protect them. Some may be straightforward and temporary, such as sandbags or the moving of valuables away from areas most likely to be affected by flood; others may involve more permanent or structural alterations or modification to the premises.
If a property is deemed at risk, it is crucial that the owner ensures a flood plan is in place and that occupiers are signed up for flood alerts.
A flood plan can be of great assistance in providing a practical guide to follow in the event of a flood and include details of important contacts and a checklist of actions to minimise damage and disruption.
It is crucial that occupiers are familiar with their insurance arrangements and check that adequate flood insurance cover is in place.
Occupiers should pay particular regard to the danger of being underinsured.
It has been reported that a significant proportion of those affected by the recent floods did not have adequate insurance in place. Therefore, be careful to check that your insurance will cover interruption to business and loss of profits, as this may not be included as standard.
Those having difficulty in obtaining insurance may wish to consider contacting specialist insurance brokers who have access to insurers that specialise in flood risk cover.
Insurers should be contacted as quickly as possible following a flood to ensure that the process of repairing and reinstating the property is underway as quickly as possible. Evidence detailing the extent of the damage, including photographs or video footage where possible, should be kept and all documentation available to support the loss provided.
Local authorities, major banks and HMRC have sought to be as sympathetic as possible and discretion applied in relation to meeting liabilities in circumstances where licensed and hospitality businesses have been the victims of flooding. And the first minister announced that every household and business in Scotland directly affected by flood water would receive a grant of £1500 with businesses whose trade was affected being eligible to apply for a further £3000.
However, this will not cover the long-term damage for many, and insurance will have to take up the slack; therefore it is vitally important, whatever the time of year, to ensure adequate protection – especially in Scotland where, as we all know, it’s hard to predict what the weather might throw at us.
• Sandra Jones is a partner specialising in insurance law at Weightmans (Scotland) LLP.