Flood Insurance is Right for Every Business — Even if You Don't Live in a Flood Zone
Picture this: you leave work seeing heavy dark clouds rolling in the distance. You heard about a flood warning on the news this morning but brushed it off. A flood has never happened in your area, so there’s probably nothing to worry about. When you arrive the next morning, the floor is soaked and many of the items in your office are damaged — but your business doesn’t have commercial flood insurance.
It’s easy to think that a flood might not impact your business. But a flood doesn’t necessarily have to mean a wall of water rushing down the street. Commercial flood insurance covers damage caused by heavy or prolonged rains, overflowing rivers and streams, storm surges, melting snow, blocked storm drains, broken dams, and more. It’s even possible to have mold or mildew that resulted from heavy water damage to be covered under flood insurance, but this is usually considered on a case-by-case basis.
What makes a rush of water considered a “flood” is if it covers two acres, or if the damages impact two properties. Water damage that comes from above, such as a leaking roof or overflowing gutters, typically is covered by commercial property insurance. However, this is where many business owners get confused. Your commercial property insurance does not include protection from flood damage, so it can't be used as a catchall. If you want your business to be fully protected, you have to purchase a commercial flood insurance policy.
Still, some business owners believe that it’s an unnecessary cost due to the notion that they don’t think they’ll ever have it happen to them. Due to the fact that most severe water damage isn’t covered by your commercial property insurance, it’s better to be safe than sorry. It’s also possible that your business might even be located in a floodplain and you don’t even know it.
Don’t Leave Your Entire Business to Chance — Having a Commercial Flood Insurance Policy is Key to Making Sure You’re Ready for Anything
Most businesses who are located within a high-risk flood area, or Special Flood Hazard Areas (SFHAs) are required to have commercial flood insurance. FEMA has broken down areas into floodplains based on their severity of risk towards flooding. You can find out if you’re located in an SFHA by locating your zone through floodsmart.gov or by visiting town or city hall and inquiring with officials about your location in relation to flood zone maps.
What most people don’t always realize, is that everyone is located in some form of flood area, it just depends on the amount of risk you’re under. Yet, just because you’re in a low-risk area doesn’t mean that flood damage is impossible. The same goes if your business is located on a hill or if your area has never had a flood — you’re still at risk. It’s at least worth considering so that you're not stuck with thousands of dollars in bills that you can’t afford when a uniquely strong storm rolls through. You’ve worked hard to build your business into what it is, and it deserves the best protection.
As of July 2017, the Insurance Information Institute gathered that a measly five percent of businesses and other non-residential properties are covered by flood insurance. In the state of Ohio, only about ten percent of businesses within Ohio floodplains were covered. The problem stems from people believing that they can get by without it, or that it simply won’t happen to them. This is simply not the case. According to the National Flood Insurance Program, nearly 20% of flood insurance claims were from low to moderate-risk areas. They also note that 90% of natural disasters include flooding. You can’t count on receiving federal disaster assistance, either. Unless the President declares a state of emergency due to flooding, your business will be out of luck and you’ll be left to foot the bill. No matter how landlocked your business is, commercial flood insurance is an important thing to consider when you’re purchasing your policies.
Businesses can obtain commercial flood insurance through the National Flood Insurance Program (NFIP). NFIP provides federally-backed flood insurance to business owners across the country. The NFIP provides coverage up to $500,000 for the building you’re in and up to $500,000 for the building’s contents. A typical claim may average around $38,000.
One important thing to note is that commercial flood insurance is not cheap. If you’re not in a high-risk flood area you won’t have to pay as much, but it will still feel significant. It’s also important that you don’t wait until you hear about an ominous storm on the weather to call about flood insurance. These policies have a 30-day waiting period from the date of your purchase before your policy goes into effect.
If your business doesn’t have commercial flood insurance yet, it’s time to look into it. Just like with any disaster, flood damage can be devastating, and it isn’t worth leaving everything you’ve worked for in the hands of fate.
About the author
Matthew T. Simon, CIC, CPCU
Since 2006, Matt has been a Licensed Insurance Advisor with Hill & Hamilton Insurance, an industry leading, independent insurance agency headquartered in Ohio. Prior to joining the team at H&H, he worked as an Underwriter with a regional insurance company located in Columbus, Ohio.
Matt is a Certified Insurance Counselor (CIC) and a Chartered Property & Casualty Underwriter (CPCU), having successfully completed the rigorous coursework and exams to earn these prestigious designations.
He’s the Vice President at H&H, serves on the Board of Directors for the Ohio Insurance Agents Association of Ohio and the Associated Risk Managers of Ohio. In 2013, Matt was awarded and recognized as the National Young Insurance Agent of the Year.