The National Flood Insurance Program (NFIP, 2013) reports that flood losses during the last decade, from 2001 to 2010, totaled nearly $2.7 billion dollars. Considering the relatively low cost for protection, flood insurance may be a valuable addition to your business insurance program. The following facts may answer some questions you have concerning flood insurance coverage:
Floods can occur anywhere. Your business doesn’t have to be located near water to be flooded. Storms, melting snow, hurricanes, backup due to inadequate or overloaded drainage systems, and dam or levee failure can all cause floods. According to the NFIP, one-third of flood insurance claims paid in the past few years have been for policies in areas with low flood risks.
Other policies don’t cover flood damage. Since property insurance generally excludes damage caused by flooding, to protect your business location and belongings from flood damage, you can purchase a policy backed by the NFIP. Coverage for non-residential property, including the building and its contents, is available.
NFIP flood insurance availability. It doesn’t matter whether your flood risk is high, medium, or low, insurance is available as long as your community participates in the NFIP program. You can determine your eligibility by visiting the NFIP website at www.floodsmart.gov, and using the One-Step Flood Risk Profile tool.
Low-cost policies for moderate to low risk. A preferred risk policy through the NFIP covering both a non-residential building and its contents may average out to $600 per year. Certain restrictions, however, may apply. Costs vary depending on how much insurance is purchased, what it covers, and the property’s flood risk.
Contents coverage is separate. Coverage on the building itself is separate from contents inside the building. Therefore, contents coverage is not automatically included and must be requested separately. This also means that renters can insure their belongings, though their maximum available coverage may be less than what is available for owners.
There is a customary 30-day waiting period. Since there is typically a 30-day waiting period before coverage goes into effect, be sure to plan ahead so you have flood insurance before you need it.
Keep in mind that Federal disaster assistance, generally offered in the form of loans, is only available if the president declares a disaster, which may or may not occur when a flooding incident occurs. However, a flood insurance policy can cover the cost of damage by flooding whether or not a disaster is declared. Be sure to contact your insurance agent for more information.