Alongside homeowners and other business sectors, retailers are potentially facing significant losses and disruption as a result of the recent floods and weather damage.

The impact of the weather damage, such as flooding, is likely to include damage to the building itself, damage to fixtures and fittings, loss of or damage to stock and interruption to the business and therefore a downturn in profits. 

This potentially presents a complex background in relation to the insurance arrangements that may exist in that there may be a number of different insurers involved.  Commonly retailers will occupy the premises under a lease and therefore the buildings insurance and responsibility for repair of the building will remain with the owner of the building. The retailer is likely to be responsible for insuring the fixtures and fittings and contents, including stock, as part of the business.  This potentially adds to the burden on the retailer, in already difficult circumstances, in ensuring that any claims are dealt with as quickly as possible enabling the property to be reinstated and to allow the business to resume or continue trading.  

There are steps that may be taken to assist in seeking to ensure this process is completed as quickly as possible.  Early contact should be made with all insurers and the property owner’s representatives.  Details should be kept of the extent of the damage including photographs or video footage where possible.  Also all available documents should be collated to evidence the value of damaged items and stock. 

Accounts should be obtained to assist in calculating any claim for loss of stock and trade/profits.  All documentation should be provided to insurers or their loss adjusters as quickly as possible and contact maintained with all insurers and their representatives to ensure a co-ordinated and efficient approach so that the repair and replacement of damaged items can be actioned as quickly as possible to minimise disruption to the business and therefore loss of trade. 

Retailer businesses should focus on maintaining critical activities. They should ensure that they inform their customers and suppliers of the situation and of their recovery plans.  They should pay particular attention to suppliers, for example they do not want further stock deliveries arriving when there is nowhere to store them and equally will want to restock quickly once the premises are able to reopen to enable them to resume trading as soon as possible when recovery allows.  Retailers should therefore plan for stock recovery. 

Retailers may have suffered significantly from damage to stock and the importance of maintaining accurate records of damaged stock cannot be over emphasised. The same can be said for the need for regular and close liaison with insurers.  Guidance should be sought from insurers before disposing of any damaged stock and items.  Food retailers - particularly those involved with perishable goods - may face additional difficulties in relation to the disposal of perishable items and the potential health issues that may arise as a result of deteriorating stock. 

Furthermore, retailer businesses should take into account health and safety considerations.  Retailers should ensure that they comply with their duties under the Health and Safety at Work Act 1974, particularly where staff may be carrying out activities that they would not usually undertake in normal circumstances. There may be health risks presented as a result of contamination.  Staff should be made aware of precautions to be adopted whilst carrying out the clean up and of the dangers they may face from debris and contact with contaminated materials or sharp objects which may have been displaced.

Electrical safety can present a major risk if electrical supplies or components or equipment have been damaged by flood water.  Additionally gas safety may also present risks in that gas equipment and installations may have been affected by flood water.  The water supply and the quality of drinking water may have been affected in addition to the potential impact on other specialist facilities such as lifts which may have been affected and require safety inspections.

Retailer businesses should also be aware of their potential eligibility for the recently announced government support packages which includes a ‘Repair and renew’ grant for affected homeowners and businesses which may provide up to £5,000 in financial support for householders and businesses to pay for repairs which improve a property’s ability to withstand future flooding.  In addition, affected businesses will be able to apply to their local authority to get Business Rates relief for up to three months. 

The HMRC are also to set up a new hotline for those affected by flooding who may have difficulties in meeting their tax liabilities whereby they will look to offer up to three months additional time to affected businesses to pay their tax liabilities which will include VAT, PAYE and corporation tax. 

In addition, £750m has been pledged by the major banks to provide financial support to businesses and individual customers affected by the floods and the package is intended to include a mixture of repayment holidays, reduced or waived fees, loan extensions and increased flexibility of terms and additional specialist support. 

Retailers should ensure that they familiarise themselves with the additional support and help that may be on offer to them to assist in their recovery. 

Sandra Jones is a partner in the Commercial Insurance Team at at law firm Weightmans

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