Three days of unusually heavy rainfall has caused extensive flooding in Alberta, Canada. Calgary, the epicenter of Canada’s energy industry, was particularly hard hit, with flooding of the city itself and widespread loss of services leading to the evacuation of the city and surrounding areas. The city’s largest indoor arena, the Scotiabank Saddledome, suffered flooding up to the 10th row of seats. More than a week later, basic services were still being restored to an essentially deserted city center, and downtown buildings still had flooded basements. Damage to residential neighborhoods has been tragic and catastrophic, mitigated only by the willingness of neighbor to help neighbor.
For Calgary businesses, losses from the property damage and the interruption of business will be massive. Such businesses will similarly incur huge costs in mitigating their business losses, with time being of the essence given that the Calgary Stampede begins July 5. Many policyholders will continue to suffer losses for months as they rebuild. Indeed, Alberta’s Premier has said it will take 10 years to rebuild the damage to Calgary and the province.
Fortunately, commercial insurance policies may provide coverage for affected policyholders’ damaged property and consequent loss of business income, as well as extra expenses incurred to recover from the floods and mitigate business losses. First-party property insurance may respond to repair or replace property directly damaged by the flood. Business income, or business interruption, insurance may allow affected businesses to recover their lost earnings, and pay for expenses that continue during the time they are affected by the flood. Such coverage may extend to losses caused by evacuation orders, and even losses stemming from damage not to the property of policyholders, but to their customers and suppliers. Extra expense coverage may extend to additional expenses policyholders incur to minimize loss. Extended business interruption coverage may cover losses that continue for months into the future.
Many policyholders will have multiple coverages that overlap and may apply, many with unique limits, deductibles, and waiting periods. Maximizing recovery under these complex coverages will be key in getting affected businesses the insurance recoveries they need to get back on their feet.
If policyholders have experienced damage or loss to their property, or interruptions to their businesses, and extra expenses caused either directly by the floods or because the property of their customers and suppliers has been lost or damaged, they should be encouraged to review their first-party property and business interruption insurance to determine whether they should submit claims to their insurers.