By James Mbithi
For an entrepreneur, a flood can turn an ordinary trading day into a costly setback. Stock can be destroyed, equipment damaged, premises rendered unusable and delivery vehicles put out of action.
With El Niño conditions expected to influence Kenya’s October–December short-rains season, the Kenya Meteorological Department forecasts intense rainfall across much of the country. Businesses need to consider how prepared they are for the financial consequences of flooding.
The risk extends beyond businesses located near rivers or in known flood-prone areas. Heavy downpours can overwhelm drainage systems, flood roads and disrupt the movement of people and goods.
Flood preparedness is therefore not just a safety measure. It is part of managing business risk and protecting the capital an entrepreneur has worked hard to build.
Protect the assets that keep the business running
The first step is to identify which assets and operations are most exposed to flooding.
Business owners should assess their premises, drainage systems, electrical installations, stockrooms and storage areas. Blocked gutters and drainage channels should be cleared, while stock, documents and equipment should be moved off the floor where possible. Businesses operating from ground-floor premises should consider how quickly water could enter their buildings and which assets would be most difficult or expensive to replace.
Stock management deserves particular attention. For a retailer, wholesaler or manufacturer, inventory represents money already invested in goods intended for sale or production. Losing that stock can leave the business without the products needed to generate its next round of revenue. Raising goods on pallets or shelving, protecting sensitive equipment and keeping essential records backed up can reduce the potential damage.
Entrepreneurs should also consider risks beyond their premises. Flooded roads can delay deliveries, prevent employees from reaching work and interrupt access to customers. Businesses that rely on transport should identify alternative routes, monitor official weather and road advisories, and establish procedures for suspending deliveries when conditions become dangerous.
Where possible, owners should identify alternative suppliers and arrangements for communicating with customers if operations are interrupted. These measures will not prevent every loss, but they can reduce disruption and help businesses resume trading sooner.
Why insurance belongs in the business plan
Physical precautions are essential, but they cannot eliminate flood risk. This is where insurance can help protect a business against the financial consequences of an insured loss.
Insurance can provide protection for covered buildings, equipment, inventory and other business assets, depending on the policy. For entrepreneurs who depend on vehicles to transport goods, serve customers or move between business locations, the scope of their motor insurance also matters.
Entrepreneurs who run businesses from home should also review the protection available for their household property, business equipment and other assets. Personal home insurance may not automatically cover property used for business, so the insurer should clarify what is protected.
The objective is not simply to purchase an insurance policy. It is to understand which losses the policy covers, the financial limits of that protection and the costs the business would still have to meet itself.
The cost of getting insurance wrong
One of the most common risks is underinsurance. An entrepreneur may insure equipment, stock or premises at a value that no longer reflects the cost of replacing them. After a loss, the available compensation may fall short of the amount needed to restore the business.
Accurate asset valuations and regular policy reviews are therefore important. Business owners should account for changes in stock levels, new equipment, renovations and increases in replacement costs.
They should also understand the exclusions, excesses and conditions attached to their policies.
Before the rains intensify, entrepreneurs should ask their insurer or insurance adviser specific questions. Does the policy cover flood-related damage to the building, stock and equipment? What excess would the business have to pay? Would business interruption cover apply, and under what circumstances? Are there particular precautions or underwriting conditions that must be met?
For businesses in flood-prone locations, the insurer may require additional risk information or precautions and may apply different terms or premiums. Understanding these requirements in advance helps an entrepreneur make informed decisions about the protection available.
For those without suitable insurance, reviewing the options before a loss occurs is important. Cover for a new customer remains subject to the insurer’s assessment, acceptance and applicable policy terms; it cannot be used retrospectively to protect against a flood that has already happened.
Be ready to recover, not just to prevent damage
Even a well-prepared business may suffer a loss. What happens immediately afterwards can influence how effectively it recovers.Personal safety must come first. Employees and customers should not be put at risk to rescue stock or equipment, and vehicles should never be driven through dangerous floodwater.
Once it is safe to do so, the business owner should photograph or record the damage, notify the insurer promptly and retain records of affected assets and relevant expenses. Damaged goods should be documented, and the insurer’s guidance on assessment, disposal and repairs should be followed where practicable.
Maintaining purchase receipts, inventory records, equipment valuations and other relevant documents before an incident can also help establish the extent of the loss. Complete information and cooperation with the claims process support the assessment of a claim, although settlement remains subject to the policy terms and the circumstances of the loss.
Protect the business you have worked to build
Kenyan entrepreneurs invest money, time and considerable personal effort in building businesses. Protecting that investment requires more than generating sales and growing the customer base. It also means anticipating risks that could interrupt operations and planning how to manage their financial consequences.
As the rains continue, Britam encourages homeowners, motorists and business owners to review their insurance protection and identify gaps before a loss occurs. Through appropriate home, motor and business insurance solutions, customers can explore cover suited to their assets and exposure to risk.
The author is the Britam General Insurance CEO and Principal Officer
