Understanding Flood Coverage for your Business (NFIP)
Is flood insurance really necessary for your business? It all depends on where you stand – on dry land, or in a soggy mess that was once your office.
Most business insurance policies don’t cover losses resulting from floods, and if you’re located in a low-risk flood area, you might be tempted to bypass this important coverage. Yet consider this fact from the Federal Emergency Management Agency (FEMA): nearly a quarter of flood insurance claims come from homes and businesses in areas considered a low risk.
Heavy rains in Georgia in September 2009 caused more than a dozen deaths and damage costing hundreds of millions of dollars — in locations suffering drought conditions just months earlier. And it wasn’t the only time Georgia was surprised by flooding. “In October 2005, we had a torrential rain event that taught a lesson to a lot of people,” says Nationwide agent Jack Hardman of Brunswick, Ga. “You may not be located in an official flood zone but because of the topography around you, or poor drainage, you could get flooded. It’s a good thing to have flood insurance unless you are located at the pinnacle of a hill.” Drew Kingery, a Nationwide agent based in Savannah, agrees. He now asks all customers to sign a flood waiver if they decline a flood policy.
If you’ve invested money in equipment or a building, flood insurance is
vital to protecting your business. Flooding can occur anywhere – it’s not
limited to just coastal areas or river basins. And in a tough economy,
the cost of damages from a flood could submerge your business
permanently. Start with a trusted National Flood Insurance
Policy from Nationwide.
Flood Stats At a Glance
- In 2007 the average amount of flood insurance coverage (for businesses and homeowners combined) was $201,598, and the average premium was $505
- The average flood claim in 2007 was $24,579.
- NFIP premiums written rose from $1.7 billion in 1999 to $2.9 billion in 2007.
- Flood loss payments totaled $523 million in 2007.
- In 2005 loss payments totaled $17.6 billion, the highest amount on record, including losses from hurricanes Katrina, Rita and Wilma.
National flood insurance protection
In 1968, the National Flood Insurance Program (NFIP) was established by Congress to help property owners protect themselves from the financial devastation of floods. Communities all over the United States participate in the program by practicing floodplain management to reduce potential flood risks. In return, the NFIP provides flood insurance to business owners, homeowners and renters in those communities.
National flood insurance, backed by the federal government, can be purchased though Nationwide Insurance — one of the largest Write Your Own (WYO) carriers for the government’s program. Nationwide’s Flood Service Center offers responsive agent and customer support.
Coverages and rates are set by the NFIP, and do not vary from company to company. Flood insurance rates are determined by factors such as the type of construction and age of your business property, number of floors and building occupancy, as well as your area's level of risk as determined by FEMA.
Once purchased, there is a 30-day waiting period, established by the
FEMA regulations, before your flood insurance takes effect. So it pays to
buy coverage well before water threatens to flow under your door.
Flood, wind and water damage: Are you covered?
In a thunderstorm or hurricane, water isn’t the only threat – wind can be a source of serious problems, too. And while water damage from everyday incidents, such as clogged drains, broken pipes or overflowing sump pumps, may be covered by your commercial property policy, damage from flood waters may not be.
Locate your nearest Nationwide agent or call us at 1-877-669-6877 to learn about flood coverage and find out how affordable it can be.
Learn what you can do to protect your business from serious losses in the event of other weather events and natural disasters.
A serious threat to business
Flooding is by far the most common natural disaster in the United
States. While some floods are caused by tropical storms and hurricanes,
many more occur as a result of thunderstorms and heavy rains, rapid snow
melt and breaches of levees or dams. New commercial and residential
developments can also cause floods due to changes in natural drainage
patterns. Regardless of how it occurs, even a minor flood can cause major
damage.
In addition to business property
insurance coverage, business owners with mortgages from federally
regulated or insured lenders in high-risk areas typically are required to
have flood insurance. If you’re located in a nationally recognized low-
to moderate-risk area, you may not be required to have it but it makes
good business sense to consider investing in such coverage. The premiums
may will be less expensive, and it will provide a high level of
protection if a sudden summer downpour or water main break inundates your
property, subject to policy terms.
How flood insurance works
For businesses in low risk areas, the NFIP offers a Preferred Risk Policy with coverage for both the building and contents for one low premium; or a Contents Only policy that’s substantially less. For businesses in high-risk areas, the premiums understandably may be higher with separate building and contents coverage. Commercial coverage provides up to $500,000 of insurance to protect the building and up to $500,000 to protect the contents.
Separate deductibles apply to the building and the contents with different amounts possible for each. Payment of the premium is made annually in one lump sum. To lower the premium, you can request a higher deductible but keep in mind that it will reduce the total claims payment if you have a loss. Claims are usually paid for the actual cash value of the building and/or contents, which is typically the replacement value, less depreciation.
For businesses that require more flood insurance coverage, a Nationwide partner insurance company can provide additional flood limits in many states. Get a flood insurance quote from a Nationwide agent today and protect the future of your business.
Did you know? … You can’t always count on federal disaster assistance.
It’s provided only if a flood is declared a federal disaster, and such assistance is often a loan that needs to be repaid, with interest, in addition to your mortgage loan.
What’s Your Risk?
The National Flood Insurance Program offers an interactive risk assessment tool on its Web site to help business owners determine their flood risk when planning their flood insurance coverage.
