Do You Need Commercial Flood Insurance?
Have you ever thought about the impact of a flood at your business location? A natural disaster could pass through your area or a plumbing problem could leave a foot of water in your facility, damaging equipment and documents in the process, causing you to close for multiple days.
Believe it or not, 25 percent of businesses that close after a flood never re-open. Furthermore, the average commercial flood claim from 2011 to 2015 was $90,000 – an amount that, if you had to pay it out of pocket, could put your company into great debt. Since this kind of disaster can put your company’s future in jeopardy, it’s essential you take out some kind of coverage – even if your area isn’t historically prone to floods.
When exploring a policy, what should you be aware of?
Types of Floods
As mentioned, not all floods are large-scale, catastrophic events. As a result, your commercial flood policy assists with protecting your business from the following:
- Flooding as a result of melting snow, leaky pipes in your building, overflow from drains and other pipes that causes damage to interior and natural disasters that result in flooding.
- Storm surges from hurricanes
- Heavy or prolonged rain
- Broken dams or levees
What Is and Isn’t Covered
On a general level, flood insurance covers buildings, their contents and any damage resulting from mold that develops after the incident. This can include:
- Your primary structure and its foundation, floors, walls and ceiling
- Electrical, plumbing and air conditioning systems
- Furnaces and water heaters
- Any home improvements made
- Equipment, fixtures and furniture
- Inventory lost to damage
What isn’t covered? Policies typically don’t include any property outside of your building or company vehicles.
Coverage Options
Even if you rent or lease a building rather than owning one, it’s still a good idea to get flood coverage. As many businesses realize once it’s too late, your Business Owner’s Policy (BOP) covers several types of natural disasters, but excludes floods. As you take out a policy, an agent may suggest separate flood coverage or an endorsement to your BOP. Additionally, unlike your regular policy, coverage is through the National Flood Insurance Program (NFIP), which the Federal Emergency Management Agency (FEMA) oversees.
However, not all flood insurance is equal. Consider which choice might be best for you:
- Contents-only coverage, for whatever is inside your facility.
- Moderate- to low-risk flood areas: A lower-cost policy.
- High-risk areas: This standard-rate policy often has separate building and contents coverage. Your premium may be based on when the building was constructed, its occupancy, number of floors, where you keep its contents and its lowest floor’s elevation in relation to the flood map. Be aware that if you live in a high-risk area or have a mortgage from a federally regulated or insured lender, you may be required to purchase this type of coverage. With these policies, businesses get $500,000 for the building itself and another $500,000 for its contents.
Also keep in mind that flood coverage doesn’t immediately kick in. The government has a 30-day period before your policy goes into effect, so it’s wise to purchase insurance well in advance of a storm.
Concerned about flood risks for your Connecticut business? To find a policy that suits your needs, work with Ion Insurance. To learn more, give Ion Insurance a call at 203.439.2815.
