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Commercial Flood Insurance

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Commercial property insurance doesn’t cover damage from floods. That’s why it’s so important to purchase commercial flood insurance. It can help your business recover from the devastating damage a flood can bring. Learn more about commercial flood insurance and how it works. 

What is Commercial Flood Insurance?

Commercial flood insurance helps cover the costs of repairing your business if it’s damaged due to a flood. Floods can damage every aspect of your building, including the electrical systems, foundation, walls, equipment and inventory.

Benefits of Flood Insurance for Businesses

Since flood damage isn’t covered by commercial property insurance, flood insurance provides essential coverage that every business should consider. Even companies that aren’t in a designated flood zone could experience flooding due to a storm or infrastructure issues.

Flood insurance can help you rebuild and repair your building and replenish damaged inventory. Water damage can seep into every area of a building and create severe problems if it’s not addressed promptly. 

For example, mold can cause serious health problems. Flood insurance provides essential protection that can help your business recover from a flood and ensure that it can operate safely, protecting your clients and employees.

How Business Flood Insurance Works

Flood insurance is unique because many policies are provided by the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA). The NFIP offers its insurance through various insurance companies. Some private companies also offer flood insurance.

With NFIP policies, the NFIP determines the coverage available and the rates, so rates don’t vary from company to company. The rates are determined by factors like the type of building and the type of business you have.

NFIP flood insurance policies also have a mandatory 30-day waiting period. That means it’s critical to purchase it well before you anticipate needing it. Private flood insurance companies may offer a shorter waiting period.

Flood insurance covers losses from floods, which the NFIP defines as an excess of water on land that is normally dry and that affects two or more acres of land or two or more properties.

What Does Commercial Flood Insurance Cover?

Flood insurance falls under 2 types of coverage: building coverage and contents coverage. 

Building coverage protects your:

  • Electrical and plumbing systems
  • Refrigerators, stoves and built-in appliances
  • Permanently installed cabinets and bookcases
  • Permanently installed carpeting
  • Foundation
  • Walls
  • Detached garages
  • Furnaces and water heaters

Contents coverage protects your:

  • Inventory
  • Personal belongings
  • Curtains
  • Carpets not included in building coverage
  • Portable and window air conditioners 

With NFIP policies, these coverages are typically purchased separately and have separate deductibles. The coverage limits for each of these types of coverage through NFIP is $500,000. 

What Does Commercial Flood Insurance Not Cover?

Flood insurance does not cover:

  • Damage that’s not caused by a flood: For example, water damage from a sewer backup would not be covered under a flood insurance policy. 
  • Business vehicles: Flood damage to your vehicles might be covered under a commercial auto policy if you purchased comprehensive coverage.
  • Financial losses: Flood insurance doesn’t help with the costs of having to close your business for repairs. For example, it doesn’t compensate you for lost revenue. Those costs may be covered under business Interruption Insurance, however.
  • Valuable papers and currency: This might include hard copy employee documents or a lease. No cash damaged or lost can be replaced.

Flood Elevation Certificates

A flood elevation certificate is essential to securing NFIP coverage. The certificate provides the insurer information about your property, including its location, its lowest floor elevation as compared to base flood elevation, building characteristics and whether or not the building is in a flood zone. Without the certificate, your insurance company must assume you’re at high risk for flooding and you’ll pay higher rates. 

To get an elevation certificate, FEMA recommends contacting your local floodplain manager and seeing if one is already on file for your property. If it’s not, you’ll need to hire a surveyor, engineer or architect to complete an elevation certificate.

Best Flood Insurance Companies

Which companies offer the best flood insurance?  Get quotes from our partner, commercialinsurance.net.

Do I Need Flood Insurance?

If you’re financing business property in a high flood risk area, you may be required to purchase flood insurance by your lender. Even if you aren’t required to buy flood insurance, it can still be a worthwhile investment. Flood damage claims can be expensive, and many come from areas that aren’t considered to be at a high risk of flooding. For example, areas with heavy snow can experience flooding once it melts.

Flood insurance can help protect your business from the unexpected. To buy a policy, consider whether you want an NFIP policy or a private flood insurance policy. You may want to get quotes for both types of policies and compare your coverage options. Choose a policy that provides affordable protection for your business. 

Frequently Asked Questions

Q: What is the maximum amount of flood insurance available for a commercial building?

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Q: What is the maximum amount of flood insurance available for a commercial building?
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The maximum amount of flood insurance you can buy with an NFIP policy is $500,000 in building coverage and $500,000 in contents coverage. Private flood policies may have different limits.

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Q: What is acceptable proof of flood insurance?

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Q: What is acceptable proof of flood insurance?
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The declarations page of your policy is typically accepted as proof of insurance.

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Q: Is private flood insurance cheaper than FEMA?

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Q: Is private flood insurance cheaper than FEMA?
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Private flood insurance companies may be cheaper than NFIP coverage. It depends on the policy. Some may have a high deductible, which can lower your premium costs, resulting in a cheap flood insurance policy. A high deductible also means more out-of-pocket costs during a flood, which could be difficult to manage. The best approach is to get quotes for an NFIP policy and 2 to 3 private flood insurance companies and compare the coverage and costs.

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