Commercial flood insurance is designed to protect your business against damages resulting from flooding. This form of insurance can safeguard both your company’s building and its contents (equipment, furniture, HVAC systems, etc.). Flood insurance exists because this type of coverage is generally not included in commercial property insurance policies. Most insurers provide this type of policy via the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA).
Is Flood Insurance Mandatory Or Optional?
Depending on your business’s location and the level of risk it faces, commercial flood insurance may be either mandatory or optional. If your company is located in an area that is prone to flooding (e.g. because it is near a river or another body of water or is in an area known for cold, snowy winters where snow melts quickly), you may wish to strongly consider purchasing this type of policy.
Flood insurance may also be mandatory or extremely useful if your business is located in a region with high amounts of annual rainfall.
Factors Affecting Commercial Flood Insurance Cost
There are four primary factors that typically influence the cost of a commercial flood insurance policy. Here is a close look at each of these factors.
Location Of Business
The cost of commercial flood insurance often varies depending on your business’s location. This means that the state your company is located in, the physical building it operates out of, and its elevation level will all impact the premiums you pay. Other location-specific factors that influence the cost of commercial flood insurance include property grade and whether your building has a basement, crawlspace, or breakaway walls.
In addition to your business’s location, the type of terrain it sits on will affect the cost of flood insurance. Floodplains are, by definition, prone to flooding. Additionally, scientists note that floods are impacted by the relative roughness of the terrain that is being passed over. Structures such as houses and fences, as well as dense vegetation, can slow down water flow. Flash floods are especially common in coastal regions with rocky terrain and dry climate. This is because the lack of soil easily leads to an overflow of rainwater.
Proximity To Natural Water Sources
If your company is located close to a natural water source such as a river, stream or lake, you will likely pay high premiums for your commercial flood insurance policy. If your business straddles two such water sources or other flood zones, the risk of flooding is even higher. Therefore, your flood insurance costs will likely be high. Be sure to check whether your state has specific laws dictating whether businesses located within a certain distance of a water source are required to obtain flood insurance.
Previous Flooding History
The cost of flood insurance also depends on your business building’s previous flooding history. If your location has flooded multiple times in the past, your premiums will likely be high. This is especially true if flooding has caused extensive damage to your building’s floors, walls and foundations.
Why Does My Business Need This Policy?
Your company can benefit from commercial flood insurance if:
- Your area experiences significant rainfall and flash floods during the springtime;
- Your area is known for fast-melting snow in the winter;
- Your business has a basement; or
- Your area is prone to hurricanes and other similar storms.
The NFIP allows for up to $500,000 in commercial flood insurance coverage for both building and personal property. According to Fit Small Business, small businesses in flood zones can expect to pay a minimum of $5,000 per year on flood insurance for a basic level of protection.
Contact Our Commercial Flood Insurance Agents
Reach out to the professionals at John M. Glover for more information on the average cost of flood insurance. Since our founding in 1916, we have been dedicated to serving the insurance needs of clients located throughout Connecticut, New York, New Jersey, Massachusetts, and Hawaii. As an independent agency, we work closely with several highly reputable insurance firms.
If your business is located near a natural water source or in any other area that frequently experiences high flooding, you will benefit significantly from acquiring a commercial flood insurance policy. Our policies include both building and contents coverage, which means you can acquire protection for your structure’s walls and foundation, as well as for any furniture, equipment, appliances and fixtures your company owns.
Call JMG Insurance Agency today at (844) 304-7332 or contact us online to learn more about our policies or to receive a quote.