Learn about the flood insurance requirements for commercial property. A National Flood Insurance Program policy offers coverage for building property up to $500,000 & business personal property up to $500,000.
Flood Insurance Requirements For Commercial Property
A natural disaster can be incredibly difficult for businesses to endure. Natural disasters often cause significant damage to your product, your location, or your ability to provide services.
Damages to your company as a result of certain events, such as fires or vandalism, are typically covered by most commercial insurance policies.
Harm done to your company due to floods is not covered by traditional commercial property insurance policies and requires separate coverage. So what are the flood insurance requirements for commercial property?
Why Businesses Need Flood Insurance
Damage due to floods is not covered by most commercial insurance policies. If you do not have business flood insurance and you experience flooding, including flooding as a result of hurricanes, you are responsible for all of the damage. This type of insurance can save companies a lot of money, especially if you have a large inventory or have an expensive location.
Following are some of the flood insurance requirements for commercial property: Flood insurance is a mandatory purchase for companies that are located in high-risk areas who also have their mortgages through a federally regulated lender. Businesses in other areas are not legally required to have flood insurance, but it is always a good idea to make this investment.
What Does Business Flood Insurance Cover?
Policies that include flood insurance cover damage done to the corporation's building and its contents. Specifically, it covers the following types of property damage:
- The building and its foundation
- Detached buildings and garages
- Any items permanently installed, such as carpeting and paneling
- Built-in appliances
- Electrical and plumbing
- The removal of any debris caused by the flooding
Commercial flood insurance also covers damage done to the following contents as a result of flooding:
- Personal belongings (your own and those of your staff)
- Removable appliances such as microwaves and portable air conditioners
- Carpets and rugs that are removable
- Other items of value, such as artwork, up to $2,500
What Isn't Covered By Commercial Flood Insurance?
There are some damages caused by floods that are not covered by this type of insurance. It is important for company owners to be aware of the limitations of their coverage. You do not want to assume that a particular problem is covered when it is not. This can quickly ruin your ability to budget properly and to correctly allocate funds in the event of a natural disaster.
The following damages are not covered by flood insurance policies:
- Damage done as a result of negligence by the property owner, such as mold or mildew that could have been prevented
- Items located outside of the building, such as trees, walkways, and swimming pools
- Any financial losses incurred as a result of business disruption
- Vehicles and their parts
Flood Insurance Requirements For Commercial Properties
In high-risk areas, flood insurance is managed through the National Flood Insurance Program. It is a good idea to contact an insurance agent to find out if your corporation is located in one of these areas, to ensure you have met all the legal requirements for doing business in your area. Flood insurance is mandatory if you live in one of those communities.
Business owners should note that there is a 30-day waiting period before flood insurance policies are considered active. This makes it incredibly important to arrange for this type of insurance the moment you open your doors. It is also crucial to keep on top of your policy and to avoid letting it lapse. Even if you have had coverage for years, failing to renew on time means you have to endure a second 30-day waiting period.
If you are not in a high-risk area, you should still purchase flood insurance through a broker. Everything from rainfall to melting snow can result in unanticipated flooding, making it crucial to have existing coverage. Losses and damages can occur without warning and are devastating for a company's bottom line. Investing in flood insurance, even if you do not live in a high-risk zone, can save you time, money, and stress should the worst occur.
Flood Insurance Requirements For Commercial Property - The Bottom Line
We hope this article on flood insurance requirements for commercial property was informative. It is incredibly important to invest in flood insurance, especially if you live in a high-risk area. Learn more about flood insurance to help you determine if it is a requirement for your company. Figuring out your insurance needs can be tricky, especially for new businesses or those who have moved and are unsure if they are in a flood zone. Contact your local insurance broker today to get more information and to purchase a policy.