Severe weather in Canada in 2022 was the third most expensive year in insurance claims, hitting an eye-watering $3.1 billion in insured losses, according to the Insurance Bureau of Canada (IBC). That makes last year the third worst year for insured losses in Canadian history.

And the destruction was not the result of a single storm, IBC notes, but rather a series of severe weather events across the country, including Hurricane Fiona, the Ontario and Quebec derecho, a late winter storm in Eastern Canada, and vicious summer storms in Western Canada. In each of these storms, flooding was a significant factor.

These costly events highlight the need for small business owners to be prepared for disasters by taking preventative measures to safeguard their properties and reviewing their commercial property insurance policies to ensure adequate coverage if their businesses are flooded.

A person wading through flood waters in rubber boots.

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Zensurance - Small Business Insurance Guide

What Are the Most Common Causes of Floods?

As Canada’s most common natural hazard, floods pose a risk to businesses everywhere. With various factors contributing to flooding across the country, small businesses need to be aware of the potential impacts. 

Here are the key factors that can affect small businesses and increase their vulnerability to floods:

1. Your Business’s Location

If your business is on a floodplain — from Chilliwack to Miramichi — you are at a higher risk for flooding. The same goes for low-lying areas (at, near, or below sea level areas like the Red River Valley) and near waterways (we see you, Grand River). Also, be aware of the construction of the building where you locate your business. Older buildings may not have appropriate drainage or the ability to withstand flooding.

2. Infrastructure

Heavy rainfall impacts ageing infrastructure, and an inundated sewer system can cause water to back up through floor drains or basement fixtures, causing localized flooding.

3. Weather-Related Floods

The spring thaw, heavy rainfall or snowmelt, ice jams, and storm surges can cause floods. These events can lead to overflowing rivers and streams, water backup, and coastal flooding.

4. Human Activities

Changes to the natural landscape, such as the construction of new buildings or roads and climate change, have led to more severe weather events, increasing the frequency and severity of extreme weather events in Canada.

What Types of Floods Are There?

Floods vary based on the type of water involved, which ranges from relatively harmless Category 1 to dangerous Category 3. The type of water impacts the level of cleaning and repair needed, with Category 3 or “black water” being the most hazardous. 

The next factor influencing flood damage is the type of flood. Categorizing flooding is not always cut and dry, as multiple types can converge to create a deluge of problems. It’s not always clear what caused a flood, either. The main flood categories include fluvial, pluvial, coastal, groundwater, internal, and sanitary floods. Here’s a breakdown of each:

Fluvial Flooding

More commonly known as river flooding, it occurs when excessive rainfall over an extended period causes rivers, streams, or other bodies of water to spill over beyond capacity.

Pluvial Flooding

Pluvial flooding is surface water flooding often caused by heavy, continuous rainfall (or snowmelt) that does not absorb into the ground, thus forcing the water to flow overland.

These types of floods are independent of a body of water and can happen in any urban area, even those at high elevations. It mainly occurs in rural areas but can also happen where no large body of water is nearby, including urban and suburban areas.

Coastal Flooding

Coastal or surge flooding is common near lakes, seas, or other large bodies of water. These floods are typically caused by severe weather conditions that result in high tides, which overwhelm the surrounding regions.

Groundwater Flooding

Groundwater flooding occurs when the water table rises above ground level due to prolonged periods of heavy rainfall. Small businesses in low-lying areas or areas with high water tables can experience groundwater flooding.

Internal Flooding

Unlike external waterways such as rivers, streams, or oceans, internal flooding occurs within a structure. Burst pipes, appliance malfunctions, plumbing issues, and inadequate drainage systems are common causes. Unlike pluvial or fluvial flooding, which is due to external factors, domestic flooding is usually caused by elements within the control of the building owner or occupant. If not addressed promptly, water damage from domestic flooding can lead to costly repairs, structural damage, and mould growth.

Domestic flooding includes sump pump flooding, which may occur when power outages or high water levels render sump pit drainage ineffective. Overflowing sinks or taps, resulting from blocked, slow drains or leaving taps running over an extended period, can cause similar water damage.

Sanitary or Sewer Flooding

Sanitary flooding occurs when sewage backs up into a building due to multiple factors, including heavy rainfall, groundwater infiltration into sewer systems, pipe blockages, and inadequate sewer capacity. Businesses in areas with old or inefficient sewer systems are more susceptible to sewer backup events, leading to flooding. Sanitary flooding is unique, unlike other flooding types like fluvial, pluvial, or groundwater flooding resulting from natural water sources.

10 Flood Prevention Tips

Whether it’s a flood of rainwater or sewage, staying afloat with flood prevention is essential!

As flooding is a common challenge many businesses face (whether in a flood-risk area or not), owners must proactively work to prevent flood events. Here are 10 prevention tips to help you prepare your business:

  1. Regularly maintain your property to prevent water leaks and other hazards that can lead to flooding. Repair anything that needs attention.
  2. Know how to shut off your gas, electricity, and water.
  3. Move valuable items, critical equipment, inventory, and documents off the floor to a higher elevation, such as the second floor of a building. Use waterproof containers and shelves.
  4. Install a backwater valve to prevent sewer backups.
  5. Install a sump pump in the basement or lower level and invest in a backup power source (blackouts are common during floods).
  6. Besides keeping the sump pump operational, have a generator or alternate power source (battery, gasoline) to keep critical equipment active, with emergency lighting well above the high-water mark.
  7. Seal doors, windows, vents, and other entry points to prevent water from entering the building. Use sandbags if necessary.
  8. Direct water away from your building and prevent backup and overflow by keeping gutters and downspouts debris-free.
  9. Keep copies of all paper, digital files, and essential contact details off-site. Back up your electronic data and store it securely. Having important data and documents, such as insurance policies, contracts, and financial records, in a safe place will save you many headaches. Ensure they are easily accessible in an emergency.
  10. Did you know that some commercial insurance policies do not cover flood damage? Check your insurance policy — are you covered for flood damage, business interruption, and lost revenue? Ensure you have adequate flood damage insurance; you may need additional coverage. Speak to a Zensurance insurance expert to advise you on your options.

How to Prepare Your Small Business For a Flood

Preparation is vital, particularly in flood-prone areas of Canada. Check out these tips to get your small business flood-ready:

Know your flood risk

  • Check local flood maps to see if your business is in a flood zone.
  • Stay informed about flood risks in the area and take appropriate measures to prepare for potential flooding. 
  • Monitor weather conditions and pay attention to flood warnings and advisories issued by local authorities. That may include subscribing to flood alerts from the government or other sources. 
  • Check with your provincial or territorial government for flood information and emergency preparedness resources. The Government of Canada provides resources on how to get flood ready.

Refer to your pre-existing emergency preparedness plan

  • If your business is in a flood-risk area, you should have already developed a flood plan or overall emergency preparedness plan that includes steps to take before, during, and after a flood.
  • Communicate the plan to employees, customers, and suppliers, and regularly test and improve it.
  • Incorporate the flood plan into your health and safety plan, identify evacuation routes, and conduct emergency drills for staff.
  • Include the locations of gas, electricity, and water cut-off points on a map stored with your flood plan.
  • Identify individuals who can assist you before, during, and after a flood.
  • Maintain a list of emergency and important contacts.

What to Do After a Flood

It’s happened to you. Your business has flooded. What steps do you need to take? There are many, but

Immediate Action

  • It may not be safe to return to or enter your property. Wait for your local authorities to give the all-clear.
  • Only attempt to access your business once water levels have significantly receded.
  • Look for any damage from outside the building. There could be structural damage, gas leaks, and electrical hazards, which can be incredibly dangerous in a flood situation. Make sure all gas and electricity services are shut down. If necessary, delay entering until an expert can examine your property.
  • Secure the property. Be cautious about hazardous materials and contaminated floodwaters. Anything absorbent touched by flood water should be thrown out. Board up windows and doors if necessary to prevent further damage or theft. 
  • Check for damage to your business property, including inventory, equipment, and other assets.
  • Document the damage, but do not attempt to repair it yourself. Record details of flood damage by photograph or video, and list everything damaged. Check it against your contents inventory list. You will need this information when filing an insurance claim.
  • Call your Zensurance broker and file a claim. Do this as soon as possible to report the damage and start the claims process. Be sure to provide the documentation and evidence of damage you collected and have a copy of your insurance policy on hand.
  • Keep all records and bills of any flood-related work you had to undertake.
  • Contact your suppliers and customers to inform and update them on your business’s status.
  • Clean up and remove debris if it is safe to do so. Be sure to take precautions, as floodwaters can contain contaminants and be hazardous to your health. Wear protective clothing (gloves and masks) to avoid any health risks.
  • Disinfect surfaces to inhibit the growth of mould and bacteria, which can start to grow within 24 to 48 hours after a flood. 
  • Remove any standing water, dry out your property, and use dehumidifiers to reduce moisture levels.

Next Steps

  • Repair and replace damaged items, such as inventory and equipment, as soon as possible. 
  • Check the subfloors, which can swell and separate with flooding. If the flood water or sewage deeply permeates the flooring, replace it. Some items cannot and should not be salvaged, including carpets, furniture, drywall, insulation materials, cushions, and coverings exposed to flood water.
  • Dispose of damaged items by following local guidelines for discarding hazardous waste. 
  • Check with government agencies and non-profit organizations to see if any financial assistance is available for flood-affected businesses.
  • While actively responding to a flood event, remember to apply what you’ve learned by updating your plan with any new lessons learned from the flood and ensure you are better prepared for future disasters.

Flood-Proofing Your Business

In addition to the preventative measures above, here are suggestions for preventive maintenance and permanent construction solutions to flood-proof your business:

  • Reinforce and properly seal walls to resist water pressure and prevent seepage. 
  • Build watertight walls around vulnerable areas, such as equipment or work areas.
  • Construct floodwalls or levees outside the facility to keep floodwaters away.
  • Install flood shields to prevent water from entering through doors, windows, and ventilation shafts.
  • Install permanent watertight doors and pumps, or construct movable floodwalls, to remove floodwaters.
  • Choose flood-resistant materials for replacement and repairs.
  • Protect your business from leaks with a suitable roofing material, such as rubber, asphalt, or metal.
  • Use high-quality, water-resistant materials, like epoxy, to seal your floors and keep your business watertight.

Does Business Insurance Cover the Cost of Flood Damage?

At a minimum, you should have commercial property insurance. It provides financial coverage if your property and its contents are damaged or destroyed due to fire, flood, theft, or vandalism. It may also include critical business interruption insurance to cover your operating expenses if you’re forced to close your business for repairs following an insurable loss.

That said, small businesses in flood-prone areas need to double-check to ensure their commercial property policy includes coverage for flood damage. Some insurance providers don’t always include it. Furthermore, it could be subject to exclusions or limitations on coverage for flood damage.

Floods can cause significant damage to your property, leading to substantial financial losses and business interruption. 

Fill out an application to get a free quote from Zensurance. Partnering with Zensurance as your small business brokerage can help you get the coverage you need to deal with the aftermath of a flood or water damage to your business property.

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About the Author: Alexandria Anthony

Alexandria Anthony is the Team Lead, Property & Hospitality, at Zensurance.