Are you asking, “does my business need flood insurance?” Hurricanes, earthquakes, and other natural disasters are calamitous to businesses. These disasters can cause significant property damages that are typically covered by a commercial property insurance policy.
Does My Commercial Property Insurance Policy Include Flood Coverage?
The standard commercial package policy (CPP) or Business Owners Policy (BOP) don’t cover damages due to flooding. To keep your business protected when damages happen after a natural disaster – a separate policy must be purchased. To view the available flood insurance visit the National Flood Insurance Program.
Is Flood Insurance Necessary or Optional?
Flooding is an excluded risk under most commercial property insurance policies. Most business owners that choose to insure their businesses with flood insurance use NFIP as a resource to obtain a policy.
For most companies, flood insurance is optional. Business owners can assess their flood perils and then purchase insurance if they prefer. However, flood insurance is obligatory if a business has a property located in a flood region and is financed through an insured or regulated lender by the federal government.
Flood Insurance Pricing
The cost of a flood insurance policy depends on many factors, including:
- The date the property was built. Eligibility for subsidized rates might be possible if your property was built before its first flood map was released.
- Occupancy of the property and how it is being used
- The number of floors
- Zone designation and the property’s location
- Community eligible premium discount
- The water elevation anticipated during a flood
- Personal property location (above or below flood elevation)
- Grandfathered zone eligibility
Types of Flood Insurance Policies
There are three types of policy forms used to implement flood insurance under the NFIP. The General Property Form is typically used to insure most businesses, excluding residential condominium associations. The Residential Condominium Building Association form is used to insure buildings and personal property owned by a condo association. The Dwelling Form is used for homeowners, residential renters, condo unit owners, and residential buildings with two-four units.
Things To Consider
If your property does not have a mortgage, flood insurance should be considered in a high-risk area. If your property is located in a coastal area, the risk of flooding and a storm surge is high. In Zone A, properties located close to water bodies have an increased risk of damage from flooding but not storm surge. Here are some things to considers before choosing flood insurance:
- Your business will not receive FEMA disaster assistance if damage occurs but not insured.
- Climate change is causing flood risks to evolve rapidly. The current flood maps aren’t consistently revised, causing the area maps to list the actual flood risks inaccurately. FEMA states that over 20% of insurance claims filed under NFIP include properties located outside of high-risk areas.
- Flood insurance premiums are lower for properties outside of high-risk zones.
There are many factors to consider when deciding to purchase flood insurance for your business. We highlighted the major points in this article, but understand that other factors should be considered. As public adjusters, we understand insurance policies’ intricacies and work on behalf of the policyholders after property damage occurs. We recommend speaking with our team of insurance experts to advise on which policies are recommended for your business. We are NOT insurance brokers. We do not sell insurance. We will, however, work with you to identify gaps in coverage to ensure you are protected. Your insurance policy is YOUR contract with the insurance company. If it is not in your policy, you can’t receive a settlement. Contact our office today to schedule a consultation with one of our public adjusting insurance experts.