If your business is in a coastal area, you may be fully aware of the benefits of commercial flood insurance. However, even if you’re not in a flood-prone area, there are still tons of factors that could cause your business to flood. The worst part is, your standard commercial insurance policy won’t cover the damages due to this unforeseen incident. But how much of a risk does your company really have of flooding? Why aren’t you covered for flooding in a business insurance policy? And how can you protect your business and livelihood from flood damage? Here’s where we’ll give you a rundown.
What is commercial flood insurance?
Commercial flood insurance is a type of business insurance policy that can help you repair damages to your company building due to flooding and help you replace your inventory or office equipment because of flooding.
You may be thinking, “Doesn’t my regular business insurance policy cover the structure of my business location and my commercial property?” Yes, it does. The big BUT, though, is that business insurance policies specifically exclude flood damage. A regular commercial property or liability policy doesn’t include coverage for certain types of water damage, including flooding.
What does commercial flood insurance cover?
We’ve learned that a typical business insurance policy won’t cover damage due to flooding. So, when you add flood insurance to your coverage, what exactly does it cover? Well, flood insurance for a business can cover expenses like:
- Replacing inventory & merchandise
- Replacing or repairing machinery
- Helping with 10 percent of the cost of improvements to a building that your business doesn’t own.
- Debris removal
- Mold (evaluated on a case by case basis)
Note that a commercial flood insurance policy may not cover costs that you may have to pay still while you’re out of business. Those expenses could be taken care of by your business interruption insurance. Commercial flood insurance also doesn’t cover anything outside of your business building. So, any landscaping systems, sewer systems, or company vehicles won’t be covered under your building’s commercial flood policy.
Do I need commercial flood insurance?
Again, if you’re not in a flood or storm-prone area, you may ask yourself, “Why would I even need flood insurance?” However, statistics show that all 50 states have experienced floods and flood damage. Data also shows that:
- 25 percent of businesses shut down from flood-related natural disasters and never reopen.
- The average amount of a flood claim from businesses in the past 5 years has been $89,000.
- The average amount of commercial property damage sustained due to flooding totals to more than $3.5 billion each year.
Plus, flooding isn’t only a result of hurricanes or heavy rains. Floods can happen because of:
- Overflowing bodies of water
- Melting snow
- Ice jambs
- New construction & Land development
- Improper drainage
So, yeah. Flood insurance can be an extremely important addition to your business insurance.
How do I get flood insurance for my business?
Valid flood insurance can come from the National Flood Insurance Program (NFIP). However, you can’t buy it directly from the organization. You must purchase a policy from an agent or agency that participates in the NFIP (like us! Give us a call today to start getting customized flood insurance quotes for your business.)
There are a few things to keep in mind before you buy, though. If you’re in a high-risk area for flooding, you may be required to get commercial flood insurance for your building. If you’re in a low-risk area for flooding and you still want to get flood insurance, you may qualify for a Preferred Risk flood insurance policy, which can cost and cover a bit less. Flood coverage also may have a 30-day waiting period before coverage takes effect. So, buying flood insurance at the last minute before a storm or hurricane could still mean trouble for your business.
How much does commercial flood insurance cost?
Flood insurance policies can vary. This is because the cost of flood insurance will be different from business to business, depending on certain factors. Usually, carriers determine the price of your commercial flood insurance from factors such as:
- Your building’s height and age
- Your building’s maximum occupancy
- How many employees you have
- Your company’s location within a building (if you’re renting a space in an office complex)
- The location of your lowest floor in relation to the elevation requirement on the NFIP flood map
- The deductible and amount of coverage you choose for your building and contents coverage.
The good news is that NFIP commercial flood insurance policies can cover up to $500,000 of your building’s contents and $500,000 for the structure of the building itself.
How can I prevent my business from flooding?
You can also save money on your commercial flood insurance by taking preventative measures. Some of the most effective are:
- Buying flood boards to install over your doors when a flood may be coming
- Sealing floors to prevent water from seeping in through the ground
- Installing non-return valves to drains and pipes inside and outside of your business
- Checking and raising electrical sockets to a full foot above the 100-year flood level in your area
- Keeping a water removal pump handy
- Stockpiling useful materials like plastic sheeting, plywood, sandbags, nails, hammers, and shovels.
Additionally, you’ll want to form a flood emergency plan for your business to make sure your employees are safe and that damages to your company are minimized. Some tips you may want to consider are:
- Know how to turn off your utilities
In a pinch, you’ll need to know exactly how to shut off your company’s electricity, water, and gas. This way, none of these power supplies can cause more damage to your property and the flood water damage to those utility lines.
- Have a list of important phone numbers on hand
You should already have a contact list of numbers and other ways to reach your employees in an emergency. Additionally, your flood plan should include a list of useful phone numbers for your company posted in an easily found location. Include the numbers of your local government, your insurance carrier, additional flood warning systems, services for your building, your building manager, your suppliers, and any emergency contacts for your business overall.
- Train your employees on flood safety
As a part of hiring or continuing education for the employees of your specific business, include proper flood safety measures for individuals, flood protocol for your company, and evacuation procedures. Make sure everyone knows where to find pertinent phone numbers and establish a meeting place is everyone suddenly needs to evacuate.
- Create a stockpile of important supplies
Finally, create an emergency supply for your business. It will look a little different from your personal home emergency kit, but there are still some vital pieces you’ll need to have stocked at your commercial location. Stock up on materials like first aid kits, plastic sheeting, plywood, flood boards, sandbags, nails, hammers, and shovels. That way, the materials you need are on hand, and no one is running out to get an important supply in dangerous conditions.
Keep your flood plan in an easily accessible location so everyone can refer to it at any time.
Make sure your employees are trained on proper flood safety procedures. Designate an emergency flood contact and a safe meeting place if everyone suddenly needs to evacuate. Create a flood continuity and contact plan for your suppliers and clients.
You can get started on business insurance quotes by filling out our online form, giving us a call, or messaging us on LiveChat.