Flooding can happen anywhere and at any time. It is the number one natural disaster that occurs in the United States. A commercial property insurance policy covers certain natural events like lightning and wind. But you need a special policy for protection against flood damage. The damages that are incurred from flood water will protect your business from having to pay for these out of your own pocket. It helps protect the location of your business, the physical contents and assets. Among the items that flood insurance covers include:
The risks of flooding are greater than what is estimated by the government in much of the United States according to recent calculations. It only takes one inch of floodwater to damage property, so getting covered for these risks is one of the safeguards you can take.
How Flood Insurance Provides Protection To Businesses
Commercial property insurance is a key piece of coverage for business owners. It protects a business’s physical location and property from covered losses that typically include fire and lightning strikes. But most policies don’t provide any coverage for flood damage. Your business doesn’t have to be in a flood area to potentially need flood insurance. In fact, there is criticism among experts who argue that the true risk of flooding is underestimated by the Federal Emergency Management Agency.
If your business is located in a part of the country that experiences snowy and cold winters that turn to warm springs, there are the risks that come from fast-melting snow. This situation is one of the most common occurrences for commercial flooding. Areas that experience moderate rainfall throughout the year also carry some risk. A clogged drain can cause the water to overflow into your business. More than 20 percent of flood claims occur on properties that are not in designated high-risk areas. It’s not just storms that cause flooding. A broken dam or new building development can cause changes in the flow of water. Here are other causes of flooding to consider:
- Heavy rain that causes flash floods
- Storm surge after a hurricane
- Broken dam or levee
- Mudslides from heavy rain that lands on hills or mountain sides
- Overflowing streams or rivers
Protects Against Water Damage Costs
Standard commercial policies have protection for businesses from non-flood related water damage. This could be something like a weather-related event that leaks water into the structure of the property like a thunderstorm that brings rain that comes in through holes in a roof. Or it could be something inside the structure like a broken water pipe that soaks the floors of a room.
But when floodwaters bring water damage to the property, there are no protections provided by a standard commercial policy. Water-damaged property is expensive to clean up and repair. If the water causes the property to be contaminated with mold, costs can go up considerably. Flood insurance will cover the cost to remove mildew or mold that occurs as a result of a flood. But if there was mold or mildew that existed prior to the flooding, it is not covered. The average commercial flood damage claim from 2011 to 2015 was almost $90,000. Most businesses don’t have the capability of paying these costs on their own.
There is usually little or no warning as to when a flood will strike. When it damages your biggest investment – your business – it can be a life-altering event. Flood insurance policies have two types of coverages. The basic building coverage is intended to cover the repair or replacement of the insured building and its foundation, central air conditioning, furnaces, and water heaters, electrical and plumbing systems, and improvements that have been installed. There are also excess flood policies that cover a single building that include property types like:
- Condominium office buildings or other non-residential use condominium buildings
- Secondary structures
- Buildings that contain more than four units or considered “other residential”
The maximum amount of building coverage is $500,000. If you are leasing your building but have made any improvements to the location, it’s worth considering a flood insurance policy.
Protects Physical Contents & Assets
The other type of coverage that a business gets with a commercial flood insurance policy is for contents within the building. This protection is for up to $500,000 and includes your inventory, machinery, merchandise, tools, fixtures, equipment, and other contents that are within your business. Contents coverage is an optional policy that can be added to a commercial flood insurance policy.
Work With The Flood Insurance Experts At Merchant Family
No matter where you live, flood insurance offers protection for your business when a natural disaster strikes your area. If you would like to learn more about the types of flood insurance available for your business, reach out to the flood insurance experts at Merchant Family Agency. Merchant Family Agency is here to discuss your needs and find the right coverage to protect your business. Contact us today to learn more.