A FAQ Guide on Commercial Flood Insurance

With recent events, we have seen that natural disasters can have a terrible financial impact on businesses. Typically, commercial property insurance will provide coverage for incidents like fire, lightning, wind, or tornados. However, you will need a specific policy if you wish to be protected from a flooding incident. When determining your risk and whether a commercial flood policy is a reasonable addition for you to consider, this FAQ guide will prove useful. 

 

Question:  Does my commercial property policy cover flooding? 

 Answer: No. Flood damage is typically not covered by a conventional business policy, such as a Commercial Package Policy (CPP) or a Business Owners Policy (BOP), including floods brought on by hurricanes, tropical storms, or severe storms. Protection against such occurrences will need the purchase of additional coverage. This additional coverage can be obtained for your business by your insurance agent through the National Flood Insurance Program (NFIP). 

 

Question: What does a commercial flood policy cover? 

 Answer:  Commercial flood insurance will help with the expense of repairing and/or replacing damages to your building and property caused by floodwaters. Below are a few examples of what your policy will cover: 

 

   Building coverage: 

• Foundation walls of your building 
• Fuel tanks 
• Plumbing systems 
• Electrical systems 
• Building appliances 

• Furnaces 
• Flooring 

With building coverage, a good rule of thumb would be that if a system is needed to make the unit habitable/ viably occupied. Flood Insurance will come into play. Flood Insurance will have limitations to property outside of the building. Items such as pools & hot tubs, fencing, decks, and patios are excluded from building protections.  

  Contents coverage: 

• Property such as furniture 
• Computers & Printers 
• Inventory 

There are limitations to the contents coverage as well. Items such as Currency, precious metals, Property Deeds, and other valuable papers are excluded from coverage on an NFIP policy. 

 

Question: Will a flood policy compensate for the financial loss of Business Interruption? 

Answer: A policy written through the National Flood Program (NFIP) will not provide compensation for the financial loss of business interruption. However, I would advise talking with your agent about this as there may be some options in the Private flood market that would provide coverage for this.  

 

Question: Is there a 30-day wait period before your coverages go into effect? 

Answer:  Yes. With any standard NFIP policy there will be a 30-day wait period from the time you purchase the policy to when the coverage will go into effect. This exemplifies the importance of obtaining coverage before a potential flood comes.  

 

Question:  What is the maximum coverage I can purchase? 

Answer:  With a commercial NFIP Policy the max coverage you can purchase is $500,000 for building and $500,000 for contents. If additional coverage is desired there are options available by purchasing an excess flood policy to help close the gap. An experienced agent will be able to help set this up for you.  

 

Question:  I am interested in hearing more. What are the next steps? 

Answer:  The best course of action is to contact an expert agent. The correct questions can be asked, options between an NFIP and/or private market can be presented, useful advice can be provided, and a comprehensive proposal can be put together to protect your company against flooding. You can get in touch with any of the flood experts at  The Staples Agency when you’re ready to have that conversation, and we’d be pleased to help.