Commercial Flood Insurance

Does My Business Need Flood Insurance?

The short answer is: it depends. While some businesses are located in high-risk flood areas and are required to have flood insurance by their mortgage lenders, others may not be mandated to do so. However, you should definitely consider that floods are one of the most common and costly natural disasters that can affect every region and state. They most definitely affect Mississippi no matter where you are in the state. If you’re on the Mississippi Gulf Coast, you’re especially vulnerable to flooding caused by yearly hurricanes and tropical storms.

Remember, no matter where you’re located, over 20% of flood claims come from properties outside high-risk flood zones. It’s always better to be safe than sorry!

Understanding Commercial Flood Insurance

Commercial flood insurance is a separate policy that helps protect your business from flood damage, as standard commercial property insurance typically doesn’t cover flood-related losses. This type of insurance covers your business’s physical location and contents, providing financial assistance for repairs and replacements.

Commercial flood insurance is available through the federal government’s National Flood Insurance Program (NFIP), managed by the Federal Emergency Management Agency (FEMA). Private insurers also offer flood insurance, but NFIP coverage is the most common option.

We offer private flood insurance through many insurers, so you always have options beyond just the federally managed flood program.

What Does Commercial Flood Insurance Cover?

Now that you know what commercial flood insurance is, let’s go over what it covers. Generally, flood insurance policies provide coverage for your building and its contents. This includes:

Building Coverage

• Building structure and its foundation
• Electrical and plumbing systems
• Central air-conditioning systems, furnaces, and water heaters
• Permanently installed carpeting over unfinished flooring
• Permanently installed paneling, wallboard, bookcases, and cabinets
• Detached garages (limited coverage)
• Debris removal

Contents Coverage

• Inventory, merchandise, and machinery
• Furniture, fixtures, and equipment
• Portable appliances
• Carpeting not included under building coverage
• Clothing, food supplies, and other personal property used for business purposes

It’s important to note that the cause of a flood plays a role in coverage. To be considered a flood, waters must cover at least two acres or affect two properties.

What Isn’t Covered by Commercial Flood Insurance?

While commercial flood insurance provides extensive coverage, there are some items and situations it does not cover.

• Property outside your building, such as landscaping and septic systems
• Business vehicles (although these can be covered under the comprehensive portion of your business vehicle insurance)
• Financial losses caused by business interruption or loss of use of insured property
• Damage caused by sump pump backups not related to flooding
• Valuable papers, records, and documents

Determining Your Risk for Flood Damage

One of the most critical factors in deciding whether to purchase commercial flood insurance is assessing your risk for flood damage. A few critical aspects to consider include:

• Your business location: Is it in or near a flood zone? You can use online flood map search tools to determine your risk.
• Or is your business in an area regularly affected by hurricanes and tropical storms?
• The building’s structure and design: Is your establishment prone to flooding due to its layout or construction?
• Equipment and inventory location: Items stored on lower floors are more susceptible to flood damage.

Purchasing Commercial Flood Insurance

When you decide to purchase commercial flood insurance, you can obtain it through the NFIP or private insurance companies. However, you can’t buy NFIP coverage directly from the federal government; you’ll need to contact an insurance agent familiar with the program.

We help protect businesses all over Mississippi from flooding with insurance from both the NFIP and private insurers.

Waiting Period and Coverage Activation

A crucial aspect to remember when purchasing commercial flood insurance is the 30-day waiting period. This means that your policy will not go into effect until 30 days after the date of purchase. You will not have coverage if a flood damages your business during this waiting period. Therefore, planning and purchasing flood insurance well in advance of potential flood risks is essential. Waiting until there’s a threat isn’t going to save you money. In fact, it’s going to cost you.

Coverage Limits and Costs

Commercial flood insurance premiums are based on factors such as your business’s location, building age, height, occupancy, and the deductible and coverage amount you choose. Premiums can vary significantly based on these factors, so working with an insurance professional to determine the best coverage and pricing for your situation is essential.

The maximum coverage for commercial flood insurance through the NFIP is $500,000 for both building and personal property. However, if you need more coverage, you can purchase excess insurance, which protects properties valued above NFIP limits and can include protection against business interruption.

Preferred Risk Policy for Low-Risk Areas

If your business is located in a low-risk flood area, you may be eligible for the Preferred Risk Policy (PRP). This policy covers both your building and its contents at a lower cost than standard flood insurance. Keep in mind that federal disaster assistance is typically offered in the form of a loan that must be paid back with interest. In comparison, a flood insurance policy could save your business thousands of dollars in the long run.

Protecting Your Business and Staying Informed

Commercial flood insurance is an essential consideration for businesses in any location and any industry. By understanding the coverage, costs, and risk factors, you can make an informed decision to protect your business from the devastating effects of flooding. Don’t hesitate to contact us to discuss your options further and ensure your business stays safe and secure.