A serious threat to business
Flooding is the most common natural disaster in the United States. While some floods are caused by tropical storms and hurricanes, most occur as a result of thunderstorms, heavy rains, rapid snow melt and breaches of levees or dams. Regardless of how it occurs, even a minor flood can cause major damage.
If you meet the following criteria, there is a high change that you will be required to have flood insurance:
- You have a mortgage from a federally-regulated or insured lender
- Your business is located in an area defined as having a high flood risk
If you're located in a nationally recognized low- to moderate-risk area, you may not be required to have flood insurance for your business, but it's wise to consider investing in such coverage. The premiums may 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).
Federal disaster assistance
If a flood is declared a federal disaster, assistance is often a loan that needs to be repaid, with interest, in addition to your mortgage loan.
How business 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.
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.
Contact your agent today for an NFIP quote, and start protecting your business from flood damage costs.