Much like residential properties, many businesses also face the risk of flooding for several reasons. A commercial property could be located near a major body of water or simply be an old building. Therefore, it’s important for business owners to acquire flood insurance. Here is a guide to flood insurance for commercial properties.
What Does Commercial Flood Insurance Cover?
A commercial flood insurance policy protects businesses against flood-related damages. A “flood” is generally defined as a rapid accumulation of water on at least two acres of land that is normally dry. Frequent causes of flooding include heavy rainfall, storm surges, overflowing streams, ruptured dams, and mudslides.
The National Flood Insurance Program (NFIP) — which is overseen by the Federal Emergency Management Agency (FEMA) — issues commercial flood insurance policies, which typically include both building and contents coverage. (The NFIP was established by Congress in 1968. According to the Insurance Information Institute, new rates for flood insurance are set to take effect on October 1, 2021).
The former coverage protects your business’s physical structure, including the walls, floors, and plumbing and electrical systems. The latter coverage protects your commercial property, including furniture, curtains, portable air conditioners, non-permanently-installed carpets, currency, and precious metals. For businesses, the limit for both types of coverage is $500,000. Each coverage also has its own deductible.
A standard commercial flood insurance policy doesn’t cover:
- Damage caused by sump pump backups
- Damage resulting from mold or mildew that you as the business owner could have avoided.
- Financial losses resulting from business interruption
- Valuable documents (e.g stock certificates)
- Commercial vehicles (vans, cars, etc.)
Is It Required?
Generally speaking, businesses are not required to purchase flood insurance. Nevertheless, it’s highly recommended that you acquire this type of coverage if your business is located in a moderate-to-high-risk flood zone, as designated by FEMA’s flood maps. Only companies that have a mortgage with a federally insured or regulated lender are typically obligated to carry flood insurance.
Even if your property isn’t located in a high-risk flood area, commercial flood insurance can be extremely beneficial if:
You primarily conduct business operations in a region known for warm springs and particularly snowy winters. This is because fast-melting snow can often lead to flooding.
Your area witnesses moderate rainfall during the springtime.
Your organization’s basement floods following construction runoff near your property and leads to damaged inventory and equipment.
Other Reasons Why Flood Insurance Is Beneficial
In addition to the reasons we’ve discussed so far, you may also want to obtain flood insurance for your business because:
More than 20% of flood-related claims are tied to organizations located outside high-risk zones, according to FEMA; and Following wildfires, the landscape around your property can change drastically and rainfall can sometimes lead to flash flooding.
How Much Does Commercial Flood Insurance Cost?
The reality is that premiums for commercial flood insurance are based on multiple factors. These include:
- Your property’s age
- Your building’s occupancy (how many people it can fit)
- The number of floors in your building
- The location of your contents (i.e. ground floor or above ground level)
- Flood risk level
- Location of bottom floor relative to FEMA flood maps
- The deductibles you choose
According to CoverWallet, annual commercial flood insurance premiums can range from anywhere between $500 and thousands of dollars. Keep in mind that business flood insurance policies typically have a 30-day waiting period before they take effect.
As with any other type of insurance, be sure to carefully evaluate your business’s needs before purchasing a policy. If you need coverage that exceeds the NFIP’s limits, you may acquire excess coverage via a private insurance company.
Get Flood Insurance For Commercial Property from JMG
Reach out to the professionals at JMG Insurance Agency to learn more about commercial flood insurance and its benefits. We are an insurance organization that has been providing high-quality insurance solutions to clients throughout Connecticut, New Jersey, New York, Hawaii, and Massachusetts since 1916. As an independent agency, we work with several well-known and reliable insurance carriers.
Regardless of your business’s size or the industry it belongs to, you can benefit significantly from acquiring flood insurance, especially if your property is located in a high-risk flood zone. Our policies include both building and contents coverage. At JMG, we know how costly it can be to clean up just a few inches of flood-related damages, and we are dedicated to helping you resolve these types of claims efficiently.
Call JMG Insurance Agency today at (844) 304-7332 or reach out to us online for more information about our policies.