Storm, fire, or flooding? This is how to deal with unexpected damages

As an entrepreneur, you carry risks with your business. You decide which risks you are willing to take and which ones you will cover with insurance. Yet there are also risks that you cannot accurately predict in advance. 

Unforeseen circumstances

Vulnerability to unforeseen circumstances varies by industry. For example, the tourism industry is sensitive to reports of terrorism, refugee issues, and outbreaks of viruses. And spending among small and medium-sized businesses in an area may drop suddenly drop sharply because a large business that used to bring in many customers has closed.

Are you dependent on one major customer or supplier? Then consider how quickly you can adapt your business if this partner falls away.

An agile company

If you have an agile company, you can respond quickly to changes, and limit any damage. By hiring temporary staff or leasing expensive machinery rather than buying it, you can quickly adapt your operations if the market suddenly changes. Are you dependent on one major customer or supplier? How quickly can you adapt your business if you lose this partner? Create an agile business so that you can reduce your entrepreneurial risks.

Who pays for the damage?

If there is a brief power failure, or if the street is not accessible for a short time, this counts as a normal business risk. Every business owner or citizen has to deal with such situations from time to time. But sometimes you are affected by a situation that lies outside the normal risks to society. In that case, you may be able to use government schemes that will compensate you for damages.

Vandalism or terrorism

Damage caused by vandalism, riots, and rioting is what insurers call wilful or malicious damage. Some insurers will pay for such damage and others will not. Check your policy to see whether you are covered. 

When criminals carry out a targeted attack, it is called terrorism. Such an attack usually has a political, religious, and/or ideological motive. In 2003, Dutch insurers established a reinsurance company for terrorism claims. You can see in your policy whether your insurer uses this terrorism cover.  Insurance companies are legally barred from offering insurance for significant acts of wilful damage such as armed conflict, insurrection, or civil war. In such cases, the government should help those who are affected.

Less work because of an emergency or government measures

A company can apply for a short-time working permit(werktijdverkorting, WTV) if it has at least 2 weeks of reduced work for staff because of an emergency. This includes situations such as a major fire or flooding. 

Insurance companies do not always pay for damage to property and possessions causedby very severe weather events. In such cases, the government may declare a disaster. The state itself then provides financial assistance for damage not covered by insurance. 

Do you have an outdoor business, and does extreme weather prevent your staff from working? You can apply for temporary unemployment benefit for them under the Inclement Weather Scheme (Regeling Onwerkbaar Weer). 

Loss of revenue caused by work in the surrounding area

Is your business less accessible because of public works going on in the area? The construction of a car park, for example, or the large-scale replacement of sewers or foundations? The effect on your business can be considerable: fewer customers, lost sales, and higher costs. You do not always have to pay for the damage yourself. You may be able to request compensation for your losses.

Compensation for losses

Compensation for losses (nadeelcompensatie) is compensation for extraordinary damage caused by work commissioned by the municipality, province, water authority, or state. The government body responsible for the work pays the compensation. Examples of work include:

• The temporary or permanent closure of a road.
• The execution of a construction project.
• The relocation of cables and pipes.

You must meet the conditions for compensation. You are entitled to compensation if: 

• There is a connection between the damage and the actions of the government.
• You could not foresee the damage.
• The damage is disproportionate or greater than the normal social risk.
• The damage has not been compensated in any other way (for example, because you were insured against it).

Filing a request

Do you think you are entitled to compensation for loss? Then submit a request for compensation (in Dutch) to the government agency responsible for the work and the damage.

Compensation

The government body responsible for the work and the damage determines the amount of compensation. In doing so, the government agency looks at your missed turnover and/or the higher costs you incur. Compensation for losses does not cover the entire damage. You must pay the part that falls within normal entrepreneurial risk yourself.

Take precautions yourself

Are you starting a business? Find out in advance what plans the municipality or other government agencies have for the area. There may be plans to redesign the street. If so, consider whether you still want to start your business at that location. This also applies when taking over an existing business. You will not be compensated for losses if the redevelopment plans were known when you started or took over the business. 

Planning damage

If the work is structural, it is called planning damage (in Dutch, planschade). This arises when the government moves a road or shuts off a connection, for instance. You can also apply for compensation for these losses from the government body that implements the plan. For wind farms and new high-voltage power lines, for example, there is a separate service desk for planning damage related to national energy projects (in Dutch, Planschade Rijksenergieprojecten).

Compensation schemes for business owners

The Netherlands Enterprise Agency has subsidies and schemes for business owners. Some of these are meant to provide compensation to specific business groups. The mass culls on fur farms, for example.

Arrangements for special cases

Sometimes there is a situation that is not covered by an existing scheme but that still calls for government action. For example, the losses from damage caused by gas extraction in Groningen. Both residents and business owners in Groningen can apply for compensation for such losses.