Natural disasters can cause significant devastation to companies. Floods can be especially destructive to a commercial structure’s floors, walls, and contents, and many businesses across the United States are vulnerable to this type of disaster. Consequently, many insurance companies offer policies that provide protection against floods. However, flood insurance policies exist as an additional form of protection, given that most commercial property policies only cover damages resulting from certain types of disasters (such as windstorms, fires, or lightning). Here is a close look at flood insurance requirements for commercial property.
Who Determines If Flood Insurance Is Required?
The federal government (and in some cases, state governments) determine whether flood insurance is mandatory for a business. If your commercial property is located in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, flood insurance is required. Otherwise, it is generally optional.
Assessing Your Commercial Flood Insurance Needs
If you have recently established your business, you may be unsure about the exact level of protection you need, and this includes flood insurance. Fortunately, there are several metrics you can use to determine your commercial flood insurance needs.
Determining Your Risk For Flooding
There are two main factors that generally determine your business’s risk of flooding: its location and the level it is on within your commercial building. Here is an analysis of these two factors.
Location Of Business
The probability of your organization flooding primarily depends on its location. If your company is situated in a coastal region, it is more likely to sustain damage due to both floods and storm surge. If your property is located near a body of water (e.g. a stream), it carries a high risk of flood-related damage. Be sure to look up your state’s laws regarding which types of businesses are required to acquire flood insurance.
Level In Commercial Building
As you may probably imagine, your business will be at significantly greater risk of flooding if it is located on the ground floor (or any lower level). The premium you ultimately pay for flood insurance depends on several factors, including the location of the lowest floor of your commercial building relative to the base flood elevation (i.e. the level to which water is projected to rise in the event of a flood). Other factors that impact the cost of a flood insurance policy include the age of your building, its occupancy, and the deductible and limits you choose.
Benefits Of This Coverage
Although there are multiple benefits to having commercial flood insurance, here we will focus on two: security from costly damages and protection for your building and its contents.
One of the main advantages of flood insurance coverage is that it provides security from potentially costly damages to your commercial property. It can often be expensive to repair or replace your commercial equipment, especially if any of your more sophisticated, high-value items sustained damage due to a flood.
A commercial flood insurance policy can also provide protection for your building and its contents. This includes furniture, computers, printers, inventory, appliances, HVAC systems, and fixtures (e.g. fans). Commercial flood insurance typically does not cover any property outside your building, such as septic systems and landscaping. Business vehicles are also not covered by flood insurance policies – you normally need commercial property insurance to protect these.
One of the best ways to purchase flood insurance is by acquiring it through the National Flood Insurance Program (NFIP), which is overseen by the Federal Emergency Management Agency (FEMA). The NFIP is the country’s largest single-line insurance provider, offering nearly $1.3 trillion in flood coverage, according to FEMA.
Talk With JMG For More Info On Flood Insurance Requirements For Commercial Property
Reach out to the experts at John M. Glover for more information on commercial flood insurance and its benefits. Since our founding in 1916, we have been dedicated to serving the insurance needs of our clients throughout Connecticut, New York, New Jersey, Massachusetts, and Hawaii. As an independent agency, we work closely with several insurance companies that have proven their reliability over the years.
Floods and storms often bring heavy damage. Therefore, it’s important to acquire commercial flood insurance in order to protect your building and its contents. This type of policy can protect both your building (i.e. its walls, foundations, and floors) and its contents. This includes HVAC equipment, office supplies, electrical and plumbing systems, furniture, and fixtures. The NFIP provides up to $250,000 in building coverage and a maximum of $100,000 for contents coverage.
Call JMG Insurance Agency today at (844) 304-7332 or contact us online to learn more about our policies.