[alnorth]

I'm much more knowledgable about personal lines insurance than I am about commercial insurance, but I cant imagine your BOP wouldn't pay for it if you didn't have some dodgy cheap crapola insurance policy. (If you were not intentionally trying to cut corners on insurance, and your policy does not cover a flood due to a plumbing mishap where your employee is at fault, fire your insurance guy. That looks like a pretty basic claim to me, its not like the river flooded, this is a plumbing water damage liability claim.)

It may come down to whether the damage vs your deductible makes reporting the claim worth it or not, but either way I don't see how you get out of this.