Flooding is a risk to any business, whether you are inland or near the coastline. In fact, one in four businesses that shuts down from a natural disaster never reopens. According to the U.S. Government, the average commercial flood claim in the past 10 years has been around $33,000, and property damage due to flooding usually adds up to more than $6 billion annually.
A general policy will not cover flood damage, and this type of insurance is only available through the National Flood Insurance Program (NFIP). To make sure you get a fair price, every commercial flood agent answers to this government agency; therefore, flood insurance is backed by the government but sold through private insurers.
Who Should Buy It?
If your commercial property is in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, then you are required to purchase a flood insurance policy. However, the NFIP reports that in 2008, a third of all claims paid were for policies in low-risk communities. Because new land development can increase flood risk by changing natural runoff patterns, it is a good idea to purchase flood insurance even if you are not near a large body of water.
For a complete list of sub-categories and to map out which zone your business falls in, visit www.floodsmart.gov, the official website of the NFIP.
What Gets Covered
There are two types of commercial building flood insurance coverage, and you can opt to buy one or both.
- Commercial Contents covers inventory, merchandise, machinery and any other contents your business has up to $500,000
- Commercial Building covers you company’s building up to $500,000. Even if your company does not own the building, you are able to insure the value of the improvements you made to the space.
If the value of your business is more than $500,000 in either of these areas, you can purchase an excess flood policy to provide total coverage up to $1 million.
In addition to these two types of building coverage, the NFIP also will keep you covered for flood protection, prevention and cleanup. Sandbagging is the most common and effective way to prevent flood damage to your business, and with your policy, you will get reimbursed for the costs associated with taking part in this defensive measure. Another important aspect that would be covered in your policy is cleanup. Any work needed to clean and remove debris will also be reimbursed under your NFIP coverage.
If you have further questions about flood insurance coverage and its provisions, Neckerman Insurance Services is here to help. Call 608-238-2686 to find out how you can extend your coverage to keep your business safe and running – no matter what happens.