Flood Insurance Don't Get Washed Away
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Real estate owners should be aware that a general policy will not cover flood damage, and this type of insurance is only available through the National Flood Insurance Program (NFIP). The NFIP will cover all the types of floods though its important to note it doesnt cover landslides even if they are caused by heavy rain. To make sure you get a fair price, every commercial flood agent answers to this government agency; therefore, flood insurance is backed by the government but sold through private insurers.
There are plenty of misunderstandings about flood insurance. At Assurance, we have compiled some information about the NFIP and its coverage to help you realize its benefits.
NFIP Coverage: Who Should Buy It?There are two main flood hazard level standards and several sub-categories that the NFIP uses to categorize a companys risk for flooding and to determine premiums.
Moderate-to-low-risk buildings Buildings in Zones B, C and X. These areas are outside of the one percent annual chance floodplain, areas of less than one percent annual chance of sheet-flow flooding where average depths are less than one foot, areas of less than one percent annual chance stream flooding where the contributing drainage area is less than one square mile or areas protected by levees.
High-risk buildings Buildings in zones A and V.
- Zone A buildings are within a certain floodplain distance from a river, lake or stream.
- Zone V buildings are within a certain distance from the coast and exposed to natural disasters associated with the ocean.
If your commercial property is in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, then you are required to purchase a flood insurance policy. However, the NFIP reports that in 2008, a third of all claims paid were for policies in low-risk communities. Because new land development can increase flood risk by changing natural runoff patterns, it is a good idea to purchase flood insurance even if you are not near a large body of water.
Associated CostsFlood insurance premiums are based on several factors, which could raise or lower the amount your company would have to pay. These factors include:
- Buildings age, height and occupancy.
- Your companys location within the building.
- The location of the lowest floor in relation to the elevation requirement on the flood map (only applicable to newer buildings).
- The deductible you choose and the amount of building and contents coverage.
What Gets CoveredThere are two types of commercial building flood insurance coverage, and you can opt to buy one or both.
- Commercial Contents Covers inventory, merchandise, machinery and any other contents your business has up to $500,000.
- Commercial Building Covers your companys building up to $500,000. Even if your company does not own the building, you are able to insure the value of the improvements you made to the space.
Sandbagging is the most common and effective way to prevent flood damage to your business, and with your policy, youll get reimbursed for the costs associated with taking part in this defensive measure. Another important aspect that would be covered in your policy is cleanup. Any work needed to clean and remove debris will be reimbursed under your NFIP coverage.
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