Courtesy of iii.org
Natural disasters can be devastating to businesses. Although damage caused by other types of natural events—such as lightning or wind—will usually be covered by commercial property insurance, you need a special policy if you want to be protected from flood damage. This Q&A will help you understand this type of product and determine if your business needs it.
Q. Does my commercial insurance include flood coverage?
A. No. Flood damage, including storm water damage, is not covered by a commercial policy, including a Commercial Package Policy (CPP) or Business Owners Policy (BOP). Flood insurance is available through the federal government National Flood Insurance Program (NFIP).
Q. What does flood insurance cover?
A. Flood insurance protects against damage to your home and contents due to flooding. This includes losses due to flooding of rivers or streams, heavy or prolonged rains, windstorms, snowmelt, blocked storm drains, broken dams or streams, or similar causes. To be considered a flood, water must cover two acres or touch two properties. In most cases if the water comes from the ground – for example from rain or snow that flows and drips onto your property – you will be covered by your commercial insurance.
Q. What is not covered by flood insurance?
A. Land outside your home cannot be sold. For example, landscaping and septic will not be covered. Additionally, flood insurance may not cover damage to your business vehicles, but this may be included in the “comprehensive” portion of your auto insurance. Financial losses caused by business interruption or loss of insured activity are also not covered.
Q. Do I need to buy flood insurance?
A. If your business is in a flood risk area and you have a mortgage loan from a federally regulated or insured lender, you must purchase flood insurance.
Q. How can I determine my risk of flood damage?
A. Land is the most important factor in flood risk assessment. Is your business in or near a flood zone? (Flood map search tools are available on the Internet) In which part of the building is your business equipment and storage? Anything sitting on the ground, for example, will be at greater risk.
Q. Where can I buy flood insurance?
A. Flood insurance is available from the NFIP and other private insurers. However, NFIP coverage can only be purchased through an insurance professional; you cannot buy directly from the federal government. To find a local insurance professional who is familiar with the National Flood Insurance Program, contact the NFIP at 888-379-9531 for a referral.
Q. How long does it take for flood water to be available?
A. In most cases, there is a 30-day waiting period from the date of purchase before your policy becomes effective.
Q. Does my flood policy cover mold?
A. Mold and/or mildew damage as a result of flooding is covered, but each problem is evaluated individually. Mold/mildew items that existed before the flood are not covered, and after the flood, the policyholder is responsible for taking appropriate and appropriate mitigation measures to eliminate mold and mildew.
Q. How can I get flood relief?
A. Commercial flood insurance covers up to $500,000 for your home and $500,000 for contents.
Q. What if I need more help?
A. You can purchase what is called additional insurance to rebuild property worth more than the National Flood Insurance Program (NFIP) limits. Advanced security includes protection against business interruption.