Asheville's Second Disaster Is Yet to Come.

Asheville and Western North Carolina, comprising 23 counties hit hard by Hurricane Helene in September 2024, are still in the midst of search, rescue, and safety efforts. Teams are on the ground attempting to restore water pressure, and Duke Energy is assessing damage and planning to reestablish basic services to inaccessible communities. Tens of thousands of homes have been flooded with 100% total loss.

While rescuing people and providing stable living conditions is the top priority, a second wave of destruction looms if help is not provided by the federal government and if a top-down reform of flood policy in the United States doesn't occur.

Personally, as a centrist capitalist, I believe in social safety nets balanced with economic common sense. This balance supports people and businesses in a cycle where each supports the other—a revolution in the capital cycle.

As we venture into the second week following the cataclysmic disaster of Hurricane Helene, we need to have serious conversations about the impending second disaster facing Western North Carolina: businesses flooded with complete losses. My business is one of those affected.

In the current political climate, especially during an election cycle, I have no doubt that residents will (possibly) receive federal assistance through property replacement plans and FEMA disaster response initiatives. These may replace underinsured homes or enforce policies that allow FEMA to spend federal funds on individuals. However, businesses will receive the equivalent of nothing.

There are over 9,400 businesses in Buncombe County and 2,950 businesses in Henderson County. Henderson County is a hub for manufacturing giants like General Electric, Kimberly-Clark, Meritor, WilsonArt, UPM, and many others. Many—not just a few, but many—of our facilities are a complete loss due to unimaginable flooding levels in areas not even designated as floodplains.

Our 12,000 businesses (including 530 large manufacturers) employ over 57% of the local population between our counties. Out of a population of 370,000, approximately 210,900 are employed locally, with about 100,000 individuals directly involved in manufacturing. Then there's the ripple effect: manufacturing jobs lead to service jobs. Think about companies like Kelsan supporting manufacturing facilities or Canteen providing food services. Essentially, around 100 of these 530 manufacturers now have no means of production, and thousands of employees have no means of employment as it will take years to rebuild facilities. But this is just the tip of the iceberg.

Insurance will not cover anything. This isn't making news yet, but expect it to in the next 7–10 days when the adverse action letters begin arriving. They will start with:

"After careful review of your policy and the associated risks, we regret to inform you that coverage for Business Personal Property (BPP) is not available under your current policy due to the presence of flood hazards in your location."

That's right; if you have had surface water affecting your building, insurance will not cover you, even if you have flood insurance, you will receive a fraction of your policy.

Because flood is not a covered peril, these types of policies are rendered into non-coverage territory:

Business Continuity Insurance: Not covered if related to flood.
Business Property Insurance (BPP): Not covered if related to flood.
Business Interruption Insurance (Revenue Loss Insurance): Not covered if related to flood.
General Liability Insurance: Not covered if related to flood.
Commercial Auto Insurance: Limited coverage in flood circumstances.
And many others: Including Professional Liability, Product Liability, Workers' Compensation, and more—all not covered if related to flood.

An economic impact akin to Hurricane Katrina is unfolding, but with potentially more devastating consequences.

Let's break this down, even if a company like ours had foreseen this and was fully insured against floods:

Flood Insurance Limitations: Flood insurance ($1,500–$5,000 annually) is nearly unusable unless you're an ultra-small business, which likely can't afford it anyway. The National Flood Insurance Program (NFIP) has a $500,000 limit for business personal property or general property. NFIP is only available in communities adopting and enforcing floodplain management, which means if a levee breaks due to mismanagement, it's not covered.
Private Flood Insurance Challenges: Private flood insurance is nearly impossible to acquire due to rigorous bonding requirements regulated by the federal government. Companies like Neptune, Lloyd's of London, Chubb, AIG, and Assurant have strict limits. Most insurers can only insure up to $10 million on commercial buildings, and business personal property up to $1 million to $2 million at maximum, even if the BPP on the property is worth $20 million, $30 million, or more. A FEMA Flood Zone X (considered low risk) would cost $20,000 annually just for the flood rider. Zones A or AE would cost $50,000–$100,000 annually.
Limited Government Assistance: Yes, there is the SBA Economic Injury Disaster Loan (EIDL) up to $2 million at 4% interest for up to 30 years (though most terms are 10 years or less). However, prepare for personal guarantees and collateral commitments via UCC-1 filings on unaffected assets to get approved. I estimate only 10% of local businesses will qualify for loans over $1 million.

Using our business as an example, this leaves us with nearly a $10 million gap loss. Did the flood insurance help? No.

This is the reality for nearly all businesses in Buncombe and Henderson counties that have suffered floods. In fact, at this moment, most business owners believe that their insurance will step in and save the day. Make no mistake: if your small business has flooded, you will receive $0 in compensation from insurance companies unless you had a costly flood rider, and, even then expect limited compensation.

If you are a mid-size to large business and you're the CEO reading this, understand that flood insurance will only pay you a fraction of the value of the equipment you owe on, and nearly nothing toward the replacement value of your building.

So what's next?

We're not sure. Allowing over 1,000 local businesses to enter Chapter 11 (or Chapter 7) bankruptcy would be detrimental to the local community to say the least and come at a loss of 100's of billions in tax and economic contributions in the local area for years to come. Keep in mind New Orleans lost over 50% of it's population, costing billions in loss tax revenues.

FEMA could help, but it would probably be a small amount per business.
The federal government could intervene, possibly forcing insurance companies to process claims under 'wind' instead of 'flood' and issuing treasury notes to raise funds.

In essence, we're all in a state of uncertainty. Our future generations' stability depends on pushing for reform and financial rescue assistance from the federal government.

Action Is Needed Now

We must advocate for:

Comprehensive Flood Insurance Reform: Increase coverage limits and make policies more accessible and affordable for businesses of all sizes.
Immediate Federal Assistance: Provide grants or low-interest loans without excessive collateral requirements to help businesses rebuild.
Infrastructure Investment: Improve flood management systems, including levees and drainage, to prevent future disasters.
Community Support: Encourage local and state governments to provide interim support to affected businesses and workers.

The time for action is now. Without immediate and significant intervention, the economic backbone of Western North Carolina is at risk of collapsing, leading to long-term consequences that will affect us all.

EDIT: As this post gains traction; please consider joining our all volunteer, 100% free mission a RecoveryLeadershipAlliance.com. More voices = more action.