Learn About Commercial Flood Insurance Policies
As a business owner, you know that protecting your building and your contents is vital to its survival. Having a flood insurance policy as part of your safe guards is just good business sense!
Flood damage is excluded from the majority of property policies which leaves your business and commercial property uninsured in the event of a flood. You need flood insurance so that, in the event of a flood, you will have money to repair or rebuild your commercial property and re-establish your source of income.
Floods are one of the most common hazards in the United States. Flood effects can be local, impacting a neighborhood or community, or very large, affecting entire river basins and multiple states.
How do I protect my Commercial Property and my Business?
Protection with Flood Insurance
Just a few inches of water from a flood can cause tens of thousands of dollars in damage. Over the past 10 years, the average flood claim has amounted to over $33,000. Flood insurance is the best way to be protected from devastating financial loss resulting from floods.
Flood insurance is available to homeowners, renters, condo owners/renters, and commercial owners/renters. Costs vary depending on how much insurance is purchased, what it covers, and the property's flood risk.
All policy forms provide coverage for buildings and contents. However, you might want to discuss insuring personal property with your agent, since contents coverage is optional. Typically, there's a 30-day waiting period—from date of purchase—before your policy goes into effect. That means now is the best time to buy flood insurance.
In addition to protecting your assets with being properly insured it is also beneficial to be knowledgeable on Flooding. Flooding is the most common hazard in the United States.
Commercial Property Risk
Your business is either in a high-risk or moderate-to-low risk area and insurance premiums vary accordingly.
Most commercial buildings in a moderate-to-low risk area qualify for coverage at a preferred rate. Preferred Risk Policy premiums are the lowest premiums available through the NFIP, offering building and contents coverage for one low price. You can also opt for Contents Only coverage, if you prefer. Premiums start as low as $550 per year for both Building and Contents, while Contents Only coverage starts at $145 per year. Commercial coverage gives you up to $500,000 of insurance to protect your building and up to $500,000 to protect its contents.
If you don't qualify for a Preferred Risk Policy, a standard rated policy is still available. Even though flood insurance isn't federally required, nearly 25% of all NFIP flood claims occur in moderate-to-low risk areas.
If you live in a high-risk area, a standard rated policy is the only option for you. It offers separate building and contents coverage.
Flood insurance premiums are calculated based on factors such as:
- Year of building construction
- Building occupancy
- Number of floors
- The location of its contents
- Its flood risk (i.e. its flood zone)
- The location of the lowest floor in relation to the elevation requirement on the flood map (in newer buildings only)
- The deductible you choose and the amount of building and contents coverage
If your commercial property is in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, you are required to purchase a flood insurance policy.