Commercial Flood Insurance

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What is Commercial Flood Insurance and Do I Need It?

Flood insurance is a special type of property insurance that protects business owners from financial loss as a result of water damage, specifically due to flooding. It provides coverage from floodwater damage including damage to the building and its contents such as equipment, fixtures, furniture, tools and more.

The primary goal of business flood insurance is to safeguard the financial interest of your business from unplanned natural disasters, in this case flooding, so you can quickly resume operations even after the catastrophe.

Business owners often overlook the value of flood insurance, especially if they are not located within the Special Hazard Flood Areas or SHFA. Though, keep in mind that even if you are not prone to frequent flooding, overland flooding is not covered by other property insurance policies and there are many instances in which having flood insurance is highly recommended. You will need this policy if:

  • You operate in a cold, snowy winter and warm spring area as fast melting snow causes flooding.
  • You experience moderate to heavy rainfall; clogged drains could still lead to heavy flooding.

What Does Commercial Flood Insurance Cover?

Generally, there are two major types of flood insurance coverage applicable for small to midsize business, each policy offers a different kind of protection:

Commercial Contents – it provides coverage for your inventory, merchandise, machinery, tools, equipment, fixtures and any other contents within your business location up to $500,000.

Commercial Building – it offers protection for the building structure up to $500,000. If you don’t own the building, all improvements you made to the space are considered to be covered.

To increase insurance coverage, business owners are allowed to purchase both policies, providing a total of up to $1 million worth of insurance. The National Flood Insurance Program or NFIP is the main body responsible for determining the coverage and premiums. Additionally, the NFIP extends assistance by keeping you covered for flood protection in the form of prevention and cleanups.

  • If you perform sandbagging as a preventive measure, you can claim related costs as part of your policy coverage.
  • If you perform cleaning and debris removal as a form of preventive measure, under your policy the NFIP will reimburse your expenses.

How Much Does Flood Insurance Cost?

Commercial Flood Insurance premiums are computed based on several factors, and the cost of your policy will depend on how much coverage you need and your floodplain classification. Other factors that affects your premium are as follows but not limited to:

  • Year of building construction
  • Building occupancy
  • Number of floors
  • Location of contents
  • Flood high risk area
  • Location (elevation) of lower floor in relation to FEMA’s flood map
  • Amount of building coverage, contents coverage, and your chosen deductibles

Premiums for business flood insurance can go as low as $500 and range into the thousands annually. But if your business is located in a moderate to low risk flood area, you can apply for a Preferred Risk Policy that offers low premium rates for those who are qualified. Otherwise, a standard rated policy applies for businesses depending on risk of flooding.

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What Are Flood Insurance Requirements?

Flood insurance policies can only be purchased from an insurance agent, and you cannot buy it directly from the NFIP nor from the federal government. Talking to your trusted agent will help gather all the necessary insurance requirements needed for you to obtain coverage. Depending on the type of coverage, flood insurance requirements for underwriting can include:

  • Insured value of the building
  • Insured value for contents
  • Lienholder information
  • Claims history
  • Elevation certificate (in some cases)

Business Insurance

Running a business is challenging enough without having to worry about lawsuits, employee injuries or property damage. Having the right insurance gives you the peace of mind to focus on what matters - running your business.

The coverage you need depends on the type of business you run. A restaurant owner needs to be covered against customers possibly getting food poisoning while an accountant needs to be covered against calculation errors. CoverWallet's intelligent assessment system will identify the insurance you need based on your specific business, get you a policy that fits your budget, and do it all in less time than you think.

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