Flood insurance is the best way to protect a property from the devastating effects of a flood. In 2019, floods accounted for more than $10 million in losses, according to the Insurance Information Institute. When flooding affects commercial properties, business owners have a lot to lose. The National Flood Insurance Program (NFIP) works with countless reputable insurance agencies to provide businesses with government-backed flood insurance to guard against losses from flooding.
Just because a business is not located in a high-risk flood zone does not necessarily mean that it is immune to flood damage. In fact, approximately 20 percent of flood insurance claims come from affected properties in moderate-to-low risk areas, according to the NFIP. As most standard business insurance policies do not include flood insurance, it is important to acquire a separate policy.
Why Businesses Should Acquire Flood Insurance
Flood insurance covers damage to a building and its contents caused by flooding. This generally includes flood losses resulting from overflowing streams or rivers, prolonged or heavy rain, snow melt, storm surge, broken levees or dams, blocked storm drainage systems, and similar causes. Water must affect at least two properties or cover at least two acres to be considered a flood.
This insurance does not cover water that comes from above, such as melting snow or rain that causes property damage due to leaks or overflowing gutters. In addition, insurance does not usually cover water damage from broken or burst pipes. These types of events are usually covered by commercial property insurance.
All business owners, even those not located in high-risk flood zones, should consider acquiring flood insurance. Flood insurance provides businesses with a wide range of benefits, such as the following.
Protection For Your Product
Businesses must have a sufficient supply of inventory in stock to ensure that there is enough supply to meet the daily demand. Depending on the type of products that a business sells, a commercial building may have tens of thousands of dollars in products on hand at any time. If there is a flood, these products could become damaged and unsuitable for sale. The business may be forced to discard the damaged inventory and purchase new replacement products.
Commercial flood insurance can help eliminate this major expense by covering business products. The NFIP covers the contents of a building up to $500,000. In addition to inventory, a policy will generally cover furniture and other items damaged by the flood. The limit for the contents of a building is separate from the limit for the business structure itself, which is an additional $500,000.
Protection For Your Building
If a commercial property becomes damaged due to flooding, insurance can help cover repair costs. Standard insurance policies cover plumbing and electrical systems, appliances, water heaters, and furnaces. A policy may also cover permanently installed cabinets, bookcases, and paneling, as well as permanently installed carpeting. Other structural items in the business, such as windows, staircases, foundation walls, anchorage systems, well tanks, fuel tanks, pumps, and solar equipment may also be covered.
Flood insurance does not typically cover sheds and other buildings on the property but may cover a detached garage. In addition, a flood insurance policy may not cover any vehicles used for the business or financial losses that result from business interruption. There are many reasons to acquire insurance, even if the property is not located in an area prone to flooding. If the property is in an area that experiences fast-melting snow in the spring or heavy rainfall, flood insurance can ward against costly repairs.
Offers Peace Of Mind
Weather can be unpredictable and businesses are not always able to protect their commercial properties from damage caused by natural disasters. Flooding can occur suddenly and worsen over time, resulting in significant damage to building structures and the contents inside. Many business owners worry that a sudden storm will come and destroy everything that they have worked so hard to build. Fortunately, flood insurance is available to provide financial protection against such incidents.
Flood insurance for businesses not only provides protection for properties after the fact but can also provide year-round peace of mind. Worrying about what could happen to a property can cause undue stress. With a comprehensive flood insurance policy, business owners can rest easy knowing that their investment is well protected from the dangers of flooding.
Speak With A Professional Business Insurance Agency
No business is completely safe from potential flooding. Flood damage can be significant and impact business for many years. Having an insurance policy in place is essential if the building is located in a designated flooding area and recommended even if the property is outside of a high-risk zone. For more information about the benefits of flood insurance for businesses or to acquire a policy, reach out to John M. Glover today.