In October 2012, the entire nation watched as Superstorm Sandy devastated millions of lives and caused property damage to many of the businesses. Yet, for many of the storm’s victims, the nightmare didn’t end when the storm subsided. Additional headaches came when they learned that their commercial insurance didn’t cover some of the situations of the businesses.
According to recent studies, at least 25% of businesses shut down after being flooded. Since there is no standard commercial property insurance that covers damage from floods, lenders require businesses to purchase flood insurance.
If you do businesses in one of those high-risk zones, then most probably, your lenders will require you to purchase a flood policy to protect their investment in your company. In areas where the risk is lower, the choice is yours.
Here are the lists of major questions about flood coverage:
What do insurers consider flooding?
For the purposes of insurance companies, a flood is classified as a temporary rising of water on land that is normally dry, causing general damage to multiple properties. Flooding can occur due to prolonged heavy rains, breached dams, blocked drainage systems, storm surge, and overflown rivers and streams. These would not be covered by standard commercial insurance.
What water damage would not be considered flooding?
A few examples of water damage that is not considered flood but is covered by your commercial insurance: A hailstorm smashes your window, permitting hail and rain free access into your building. A heavy rain soaks through the roof, allowing water to drip through your attic or ceiling. A broken water pipe spews water into your building.
What’s my risk for flooding?
The best indicator of being at risk is your location. Is your business location a threat for hurricanes, tornadoes or heavy storms? Is it near the coast, river, lake, or stream? But you have to keep in mind that according to recent studies, over 50 states have experienced floods during the past 5 years. In other words, there is no longer considered a totally safe area.
How does flood coverage work?
The key word here is ‘caused’. Therefore, the pre-existing damage won’t be covered. Flood insurance pays for the repair or replacement of the contents of your building. But you have to take the necessary actions immediately, after the flood to eliminate mold and mildew. For full protection, you can purchase ‘excess’ insurance coverage. This coverage helps you make up for the loss of your business while it is being repaired.
How much does a flood policy cost?
The cost of the policy is based on your level of risk and the amount of coverage that you need. It can vary greatly, so the best way to know for sure is to contact your agent!
These 5 questions will give you something to think about. And you need to consider two additional factors prior to making your decision.
1.) Federal assistance comes as a loan with 4% interest that would result in an annual payback of $2,880 for 30 years.
2.) According to statistics, the average commercial flood claim is for $89,000.
Lastly, flood policies take effect 30 days after purchasing it, so don’t wait for the heavy rain to come before making up your mind.
If you need assistance regarding flood insurance for your businesses, don’t hesitate to call Well covered Insurance at this number (386) 218-4951. We provide quality insurance services at the most competitive prices. You may get a free quote here.