When you’ve spent years building your business, putting your time, money, and effort into it, protecting it becomes a priority. Naturally, you want to protect it from any unforeseen disasters, and that’s why it is smart to think about commercial flood insurance. Business owners today want to take all the necessary measures to ensure that their businesses can recover from any loss.
Most businessmen consider getting commercial property insurance, but did you know that this type of insurance doesn’t cover any damage caused by a flood? To cover yourself completely from all types of damages, you will need to think about getting flood insurance. Given that floods are naturally occurring and mostly come without notice, you need to get commercial flood insurance for your business property.
Depending upon the location of your business, you must start thinking about getting commercial flood insurance. If your business is located in an area prone to floods or near a flood zone, you should strongly consider getting flood insurance. We have covered some frequently asked questions about commercial flood insurance to get you started to help you out.
· Who Provides Commercial Flood Insurance?
The Federal government provides flood insurance through the National Flood Insurance Program (NFIP). The insurance policy by the NFIP will cover all types of floods, including storm surges, flash flooding, snowmelt, or mudslides. You can also acquire private flood insurance. The flood insurance by the NFIP is provided by insurance professionals on the federal government’s behalf.
Apart from the NFIP, there are private insurers who offer coverage against loss caused by floods. Therefore, you can look into both options and determine which insurance provider will meet your business’s needs. FEMA usually requires a 30-day waiting period for new flood insurance policies. That means you need to buy a commercial flood insurance policy before a possible flood event.
· What Is Covered by Flood Insurance?
Generally, commercial flood insurance covers damage to your building and contents caused by floods. This includes losses resulting from water from overflowing rivers or streams, storm surge, rain, snowmelt, broken dams, blocked storm drainage systems, or other causes. To be considered a flood, waters must cover at least two acres or flood at least two properties.
Both the building and its contents get the primary coverage of up to $500,000. The coverage would include repairs and replacement for items such as damaged air conditioning, electric systems, or water heaters. In addition, replacing the building’s contents, including machines, inventory, and merchandise, will be covered.
· How Much Does Commercial Flood Insurance Cost?
Flood insurance premiums are determined by the chances of your business being flooded and how much flood damage can be done, up to the policy limits. The biggest factor in the premium is what flood zone your business is in, followed by how much you want to insure. Flood insurance pricing is complex, and you need to speak with an insurance agent to get an accurate quotation.
The actual amount that will be covered depends on the property’s value and the loss’s extent. Those in low-risk flood areas pay lower premiums, while those in high-risk areas pay more. Also, the premiums can also be affected by factors such as the building’s age, the number of floors, and also the contents’ location in the building.
In instances where your business needs coverage of more than $500,000, you can opt for extra coverage. Hence, you should purchase an excess flood insurance policy that covers up to $1 million for more premiums.
· What Isn’t Covered by Flood Insurance?
Besides knowing what your insurance will cover, you need to know what damage and loss are not covered by your insurance policy. Most flood insurance policies don’t cover the loss of property outside the building. To elaborate on that, if you take insurance coverage provided by the NFIP, you should know that they don’t offer Business Interruption coverage. Therefore, the insurance will not compensate you for the income losses incurred when the business was closed down.
The good news is that there are private insurers who provide Business Interruption coverage. You can also choose to purchase excess commercial flood coverage, which includes compensation for the business when they are non-operational.
· Who Should Consider Buying Commercial Flood Insurance?
Commercial flood insurance can be purchased by anyone who has a commercial business in a high-risk flood area. In most instances, business flood insurance is mandatory. Businesses located in high-risk areas or have a federally-regulated mortgage by an insured lender must have flood insurance.
You can determine if your business is in a high-risk area by checking the FEMA Flood Map Service Center Flood Map. You can use this link to find your official flood map, access a range of other flood hazard products, and take advantage of tools to better understand flood risk. The map highlights places that are more prone to experience floods. This feature helps businesses understand if they need to get a commercial flood insurance policy and which type of coverage they should get.
The Final Word
Natural disasters can be devastating to a business. A commercial property insurance policy usually covers damage caused by some types of natural events like lightning or wind. However, your business needs a commercial flood insurance policy to protect from damages caused by flooding. It ensures that you have coverage for recovering from losses or damage to your building or its contents following a flood.