The Harvey tropical storm has highlighted the impact that flooding can have on commercial properties.
Many commercial properties in Texas have outstanding commercial mortgages and a few companies risk defaulting on payments because flood damage has prevented them trading.
Many business premises in the United States do not have adequate flood insurance. Owners of businesses outside of the known flood areas have mostly not taken steps against floods, believing that they were not at risk.
The Harvey storm was so intense it caused many properties outside of known flood plains to become waterlogged. Properties such as hotels that are undamaged have suffered poor business because people are prevented from traveling to them because of flooded roads.
Previous storms such as Hurricane Sandy and Katrina resulted in minimal commercial mortgage defaults, so the majority of businesses in Texas are expected to be able to recover and continue to keep up with their commercial mortgage repayments.
Judging by the last few winters in the UK, there are many British businesses that could suffer if flooding returns to the UK. The Harvey storm is a stark reminder to prepare for natural disasters through having adequate insurance. A business needs sufficient cash reserves or interruption insurance that enables them to withstand the temporary loss of business that floods can cause.
Landlords for both private and commercial properties can purchase insurance to cover the cost of repairs and loss of rental income if their flooded properties are vacant for a while.