Natural disasters, like flooding from a hurricane, heavy rain, or river breach, can be devastating for businesses. According to FEMA, only 40% of businesses reopen after being impacted by a flood if they lack flood insurance. Flood insurance premiums vary depending on the construction date and the flood risk of the property, but the price of not having flood coverage will cost you greatly, both emotionally and financially.
According to Insurance Information Institute (III), commercial property insurance does not include flood coverage including a Commercial Package Policy (CPP) or a Business Owners Policy (BOP). This means, yes, you do need to purchase a separate from the federal government’s National Flood Insurance Program (NFIP) to be protected from a flood.
Each insurance policy can vary, so be sure to read yours carefully before signing up. But typically, flood insurance covers damage to your building and contents caused by a flood. This includes losses resulting from water overflowing rivers or streams, heavy or prolonged rain, storm surge, snowmelt, blocked storm drainage systems, broken dams or levees, or other similar causes, according to III. To be considered a flood, waters must cover at least two acres or affect two properties. It is normal for flood policies to NOT cover damages if water comes from above, like from rain or melting snow, but don't worry! Your regular insurance policy should cover that!
Property outside your building generally will not be covered by an NFIP or other type of private flood insurance policy. This includes things like landscaping or septic systems. It is important to note that business interruptions, resulting in financial loss, are not included in flood policies.
Talk to a trusted insurance agent or company to see if your location and finical needs indicate that flood insurance would be a good option for you and your business. To find a local insurance professional who is familiar with the National Flood Insurance Program, contact the NFIP at 888-379-9531 for an agent referral.