When you hear the term “flood insurance” you might think it’s a precaution that homeowners need to take so they can cover any damages caused by a storm that floods their basement. While flood insurance is important for those that live in areas prone to flooding, flood insurance for business is also a worthwhile investment.
According to the Federal Emergency Management Agency (FEMA), 25% of businesses that close after an event like a flood never reopen; and, on average, FEMA data shows that flood claims amount to nearly $89,000. Right now you might be saying to yourself: Doesn’t my commercial property insurance include flood coverage? No. In most cases, damage from flooding is limited or excluded for flood prone areas under a standard commercial property insurance policy.
What does flood insurance cover?
Flood insurance provides coverage for damage to your building and its contents caused by a flood. These losses can be caused by overflowing rivers or streams, prolonged rain, a storm surge, or a variety of similar cases. To be considered a flood, water must cover at least two acres or affect two properties. If it’s simply water damage caused by rain – for instance, a leaky roof – this will, more than likely, be covered by a standard commercial property insurance, not flood insurance. When commercial insurance carriers limit or exclude flood, coverage is available from the National Flood Insurance Program (NFIP).
What isn’t covered by flood insurance?
What NFIP flood insurance doesn’t cover is just as important as what it does. Generally speaking, property outside of your building isn’t covered by flood insurance (e.g., landscaping and septic systems). Business vehicles are also not included in flood insurance coverage. Lastly, any financial losses caused by business interruption or loss of use of insured property aren’t covered by flood insurance. However, there are other kinds of commercial policies that extend or supplement NFIP coverage, so make sure to speak with your insurance broker to determine what you need as part of your risk management and insurance plan.
Do I need flood insurance?
Each business has its own unique risk factors that need to be accounted for as part of its insurance and risk management plan. They can be related to the industry in which you operate, where your business is located or a myriad of other variables. If you’re uncertain as to whether or not you need flood insurance, speak with your insurance broker. He or she can analyze your situation, identify any coverage gaps and help you determine if flood insurance is something your business should have.
Philadelphia, PA, 19102