Floods are undoubtedly one of the most frequent and destructive natural disasters that affect businesses across the United States. According to the Federal Emergency Management Agency (FEMA), commercial flood claims cost $90,000 on average to resolve. Also, it’s often especially expensive to repair water-related damages if a property is covered in mold or mildew. Therefore, it’s essential to obtain commercial flood insurance in order to protect your organization’s walls, floors, windows, and equipment.
Commercial Flood Insurance: Mandatory or Optional?
Most commercial property policies do not include flood-related coverage. However, business owners typically purchase flood insurance through the National Flood Insurance Program (NFIP), which FEMA manages.
Commercial flood insurance is, in fact, optional for a majority of companies. Businesses can choose to acquire this type of insurance after assessing their flooding risks.
They can also consult FEMA’s flood maps to discover whether they are located in a high-risk, medium-risk, or low-risk flood zone.
What Does Commercial Flood Insurance Cover?
A standard business flood insurance policy includes coverage for both a building (foundation, walls, etc.) and its contents.
For businesses, coverage limits for both of these areas are $500,000 and generally come with separate deductibles. Contents coverage pays for damage to items such as furniture, equipment (including HVAC equipment, fixtures, and appliances that are built into the building), and inventory, while building coverage can include protection for fuel and water tanks, solar equipment, window blinds, plumbing and electrical systems, and detached garages.
Commercial vehicles such as cars, vans, and trucks are typically not covered by business flood insurance.
Types of Businesses That Need Commercial Flood Insurance
There are two kinds of businesses that typically need flood insurance: those located in coastal areas and those situated close to bodies of water. Here is a close look at each of these two types of businesses.
Businesses in Coastal Areas
If your organization is found in a coastal region (East or West), you will benefit significantly from purchasing commercial flood insurance, even if you do not pay a mortgage for your building.
This is because your property faces a substantial risk of damage due to flooding and storm surges. FEMA designates coastal areas as “V” Flood Zones.
Businesses Near Bodies of Water
It is also a good idea to consider obtaining flood insurance if your business is located near a body of water, such as a river (which can overflow), lake, or ocean. FEMA calls these areas “A” Zones. These regions are at significant risk of flood-related damages but not storm surges.
If your business is situated in a low or moderate-risk zone (Zone B, C, or X depending on how new a map is), there are three things you should keep in mind before purchasing flood insurance:
If your building and contents are damaged but not insured, FEMA will not provide your organization with disaster assistance in the event of a flood.
Climate change continues to affect the flood risks of many areas throughout the United States. Therefore, the published flood map for your region may not always reflect your property’s true risk of flooding.
Should you purchase flood insurance and your region is low or moderate-risk but is later marked as a high-risk flood zone, your original zone will be used to calculate your future policy premiums. This is known as “grandfathering.”
How Much Does Commercial Flood Insurance Cost?
Premiums for commercial flood insurance typically vary based on multiple factors, including:
- Your building’s location
- Your building’s size (including the number of floors)
- Your building’s age
- How your building is utilized (occupancy)
- The limits and deductibles you choose
There is also typically a 30-day waiting period before a commercial flood insurance policy takes effect, so be sure to keep this in mind.
Speak To The Commercial Flood Insurance Experts
Reach out to the agents at JMG Insurance Agency for more information on what types of businesses need commercial flood insurance. Since 1916, we have been dedicated to servicing the insurance needs of clients throughout Connecticut, New Jersey, New York, Hawaii, and Massachusetts. As an independent agency, we work closely with several stable and reliable insurance carriers.
If your business’s property is located in a high-risk flood zone (near a body of water or in a coastal region), you should strongly consider purchasing commercial flood insurance.
Our policies, which we offer through the NFIP, include both building and contents coverage. The limits for both of these coverage areas are $500,000.
If you need additional coverage, you can purchase excess coverage. Call JMG today at (844) 304-7332 or contact us online to learn more about our insurance policies or to request a quote.