Floods are one of the most frequently occurring natural disasters in the United States. They can often leave significant damage in their wake, especially in certain areas. If you own a business, you know that flooding — including flash floods, mudslides, and storm surges — is just one of the many risks your organization faces. Depending on your location and other factors, you may be required to obtain commercial flood insurance. In any case, you may be wondering whether commercial flood insurance is worth the cost. Here is a close look at this subject.
What Is Commercial Flood Insurance?
Before discussing whether commercial flood insurance is worth purchasing, it’s critical to understand what commercial flood insurance protection covers . You can buy business flood insurance via the <National Flood Insurance Program (NFIP), a program that was created in 1968 and which the Federal Emergency Management Agency (FEMA) oversees.
A standard commercial flood insurance policy includes both building and contents coverage. The former coverage protects your business’s foundation walls, floors, and ceiling, as well as your plumbing and electrical systems, HVAC equipment, window blinds, fuel tanks, and permanently installed carpets. Meanwhile, contents coverage shields your:
- Tools and equipment
- Furniture
- Clothing
- Appliances
- Electronics
- Carpets and rugs you installed
The limit for building coverage is $500,000, and it’s the same for contents coverage. These are generally obtained separately and have different deductibles. It’s important to have flood insurance because according to FEMA, one inch of floodwater alone can cost up to $25,000 to clean up.
What Isn’t Covered
As beneficial as commercial flood insurance is, it does not cover everything. The following items and damages are generally not covered under this type of policy:
- Commercial vehicles such as cars, vans, and trucks
- Outdoor property such as fences, decks, and septic systems
- Damages resulting from mold, mildew, or moisture
- Financial losses resulting from business interruption
To protect these items and repair these damages, you will likely need to acquire a separate commercial property insurance policy.
Cost of Commercial Flood Insurance
Premiums for commercial flood insurance typically vary depending on multiple factors, including your area’s flood risk level (high, medium, or low, per FEMA’s flood maps). If your business is situated near a body of water or at a high elevation level, you will likely pay a high amount for flood insurance. Other factors that affect the cost of flood insurance include:
- The year your building was constructed
- Your building’s occupancy (square footage) and construction type
- The number of floors in your building
- Your contents’ location
- The state your business is located in
- Location of the bottom floor relative to FEMA’s flood map
- Your chosen deductibles and specific coverage needs
According to CoverWallet, commercial flood insurance costs can range anywhere between $500 and thousands of dollars per year. Should your business be situated in a high-risk flood area, an Elevation Certificate may be utilized to determine your premiums.
If your organization is in a low or moderate-risk flood area, however, you may be eligible to obtain a Preferred Risk Policy or another type of discount. Per FloodSmart.gov, you can buy a Preferred Risk Policy for under $325 annually. You are also required to carry flood insurance if you have a mortgage with a government-regulated or insured lending institution.
Ultimately, it is worth purchasing commercial flood insurance because this type of policy helps protect your business in ways other policies cannot.
This type of policy can also help you avoid paying large sums to repair damages caused by floods and allow you to remain eligible for federal disaster assistance in the future if you’re a small company that has received loans from the Small Business Administration (SBA).
Get Commercial Flood Insurance From JMG
Reach out to the professionals at JMG Insurance Agency for more information on commercial flood insurance. Since 1916, we have been committed to servicing the insurance needs of clients throughout Connecticut, New Jersey, New York, Hawaii, and Massachusetts. As an independent agency, we work closely with multiple well-known and reliable insurance providers.
If you’re a business owner, you will benefit significantly from purchasing flood insurance through the NFIP. Our policies include building and contents coverage, which means both your organization’s physical structure and your belongings can be protected from flood-related damages.
If you need coverage above the NFIP’s limits ($500,000 for both coverages), you can obtain “excess” coverage. NFIP policies also typically have a 30-day waiting period.
At JMG, we understand the immense devastation that floods can cause and will thus work tirelessly to ensure your business is properly protected. Call JMG today at (844) 304-7332 or contact us online to learn more about our insurance policies.