One of the worst things business owners could face is a flood. Heavy rain or overflowing rivers can cause massive water damage, which can be extremely costly to fix. When flooding occurs, there is the risk of architectural damage to the structure. This could affect the structural integrity of the building, jeopardize the safety of employees, and even hinder business operations.
Excess flood insurance can help mitigate the cost associated with flooding. If your business is located in a flood-prone area, it is advisable to talk to your insurance provider about adding commercial flood insurance to your existing policy.
FAQs about commercial flood insurance
Before you start shopping around for commercial flood insurance, it’s essential to know the basics of this type of coverage. Having a firm understanding of these policies can help you make an educated decision regarding protecting your business.
What is commercial flood insurance?
Commercial flood insurance is a separate policy that can be added to your commercial property insurance. It helps protect against the risk of flood damage, which isn’t usually covered under standard business insurance policies.
The NFIP or National Flood Insurance Program is a government-run program that helps individuals and business owners pay for damage caused by floods. The NFIP can pay up to $250,000 in losses, but you can be reimbursed for much more if you have excess flood insurance.
What is excess flood insurance?
Excess flood insurance is a type of private flood insurance that offers additional coverage beyond what the NFIP provides. It usually pays for additional costs if the NFIP coverage is exhausted. For example, if a severe storm causes $500,000 in damage to your property and the NFIP only covers up to $250,000 of that amount, excess flood insurance will reimburse you for the remainder.
What does commercial flood insurance cover?
Commercial flood insurance typically protects policyholders from the following:
- Structural damage to buildings or office spaces
- Damage to equipment and stock
- Appliance and electronic damages
- Carpeting and flooring
- Plumbing and HVAC
Commercial flood insurance plans may also provide ICC (Increased Cost of Compliance) coverage of up to $30,000. This can be used to pay the costs of elevating, deconstructing, or relocating a damaged structure.
What do commercial insurance policies exclude?
Commercial insurance policies usually exclude the following:
- Damage caused by mold, moisture, and mildew which the property owner could have prevented
- Financial losses resulting from business interruption (Business interruption insurance policies usually cover these)
- Damaged caused by plumbing issues such as drain backup unless a flood caused it
- Property outside your building, such as septic systems or landscaping
- Valuable papers such as tax records and business documents
- Business vehicles (Commercial auto insurance policies usually cover these)
How much does commercial flood insurance cost?
The cost of a commercial flood insurance policy can range from a few hundred dollars to thousands of dollars a year. Factors that could affect the price include:
- The placement of the firm within a building (Businesses located on higher floors typically pay lower premiums)
- Your deductible (The bigger your deductible, the cheaper your premium will be)
- The building’s height, age, and occupancy
- The property’s location and flood-zone risk
- The amount of coverage needed
When does commercial flood insurance take effect?
As with any other type of plan, commercial flood insurance takes time to go into effect. Most policies have a 30-day waiting period following the date of purchase before coverage kicks in.
After the waiting period, a commercial flood insurance policy will remain in effect as long as you pay the monthly premium. It’s advisable not to wait for an upcoming storm before buying commercial flood insurance since the waiting period will have to lapse before the policy goes into effect.
Do all businesses require commercial flood insurance?
Commercial flood insurance is not a requirement. But if your business is located in or near a flood zone, it is always best to have a commercial flood insurance policy. Dealing with flood damage can become a huge headache for your business, so being prepared could help you avoid future problems.
How do I file a claim for flood damage?
In case of a flood, you should contact your commercial flood insurance carrier immediately. They will assess the damage and forward a claim to the underwriter for further action. Your insurer may also send a claims adjuster to evaluate the extent of the damage and determine if other buildings in the area were affected by flooding. The policyholder needs to present a “Proof of Loss” within 60 days of the date of loss.
About Snyder Specialty
Snyder Specialty, LLC is a New York-based underwriting facility that provides a range of property and liability solutions for personal and commercial lines. Specializing in coastal properties and hard-to-place risks, Snyder Specialty expands your current capabilities with proven solutions for complex risks. Find out more about the company’s range of services by calling (718) 362-8039.
