Does My Business Need Flood Insurance?

When you pour your energy, time and heart into your business venture don’t let it fail, don’t let anything take it, you block your market competition in many ways but having the right protection although not as exciting as marketing is necessary to protect your asset.

In this article, we are going to explore the need to have commercial flood insurance and the many ways to control the cost of flood insurance for your commercial building.

What is the cost of flood insurance on a commercial building?

What the options for a flood insurance policy for a commercial building?

Is the private flood insurance market writing commercial flood insurance policies?

What is covered on a commercial flood insurance policy?

How much coverage can I get for flood insurance on my commercial building?

Commercial condominium flood insurance coverage. 

Flood Insurance coverage for commercial loans.  

Commercial flood insurance rates. 

DOES MY Business need Commercial Flood Insurance?

According to a 2018 study, led by the University of Bristol, far more are at risk of flooding than regulatory flood maps have determined.

This study estimates 41 million Americans are at risk from flooding rivers, which is more than three times the current estimate of 13 million people, based on regulatory flood maps.

Using high-resolution maps of the entire country (vs. the 60% utilized by FEMA), a greater focus on the potential flooding of rivers and streams, and more precise estimates of actual dwellings, this study predicts more than 60 million Americans may be vulnerable to a 100-year flood by 2050.

If you’re considering flood insurance for your business, there are many things to keep in mind.

It’s very rare for a business to sustain flood damage without operational interruptions or financial liabilities.

The sad fact is 77% of small businesses admit they are not prepared for a natural disaster… and floods are America’s #1 natural disaster.

Almost 40% of small businesses never reopen their doors following a disaster.

Your business could feature a floor full of displayed merchandise or be a small office with a few computers.

Just a few inches of water can cause tens of thousands of dollars in damage. Flood waters ranging from a few inches to several feet can ruin your business property and costly equipment, tarnishing your ability to fully service your clients and fulfill your business operations.

Commercial Flood Insurance helps to protect your business from the cost of flood water damage.

How do I know if I need Commerical Flood Insurance?

The first step is to check to see if your property insurance has coverage for the event of flooding but don’t be surprised if this is not covered many policies omit to cover “a flood” as a risk that they will cover. Most hazard insurance policies DO NOT cover flooding.

You see property insurance companies are not dumb, they know that you statistically have a higher risk of flooding then any other risk they do cover. Even in an area that is “considered” not a high-risk flood zone can flood and do flood.

Every year 20% of all flooding events across the nation are in areas that are considered low to moderate risk.

Flooding is the nation’s number one disaster and is a catastrophic event (meaning that it will affect many properties at one) as well as there is little preventive actions you can take that will protect your property is mother nature decides to open up the sky.

If you have a mortgage on a building you own then you will be required to purchase a commercial flood insurance policy. And if you have had the loan longer then 10 years you are well familiar with the cost of a commercial flood insurance policy. NOW would be a good idea to shop for a private commercial flood insurance option.

We can help.

Yes please shop a policy for me.

How much does commercial flood insurance cost?

For those building that is in a higher-risk flood zone map (Zone V and A) the cost depend on the size of the building as well as the coverage amount.

The maximum amount of coverage available on a commercial flood policy through the NFIP is $500,000.

Some of the private flood commercial policies match this coverage limit some will go up as high as $14 Mill.

Buildings that are in low to moderate risk flood zones (Zone X) typically can get a much better premium on the NFIP Flood Insurance program because of the government subsidies these policies to date.

However, there are rumors and we have seen it in 2018 – the NFIP is planning on increasing premiums 20% annually until this premium matches the high-risk rates.

So if your premium keeps going up year over year, it might make sense to move to a commercial private flood insurance policy, we can help click here to begin. 

COST of commercial flood insurance

• Flood insurance premiums will take into account several factors

• The age of the building

• The location of the building to the risk

• Location of the lowest flood in relation to the Base Flood Elevation (BFE)

• The flood insurance Rate Maps for your area

• Private commercial flood insurance is underwritten through Lloyds of London can double coverage and reduce premium drastically

• Higher deductibles will also help control cost

We will shop all commercial flood insurance options for your property to ensure that we are getting you the best coverage at the best price.

Better Flood insurance offers Nationwide flood insurance

Better Flood Insurance writes across the nation and many of the insurance companies we shop have a Nationwide flood insurance offering.

You should know that there are many options for your flood insurance. Most of our peers don’t know about them because they tend to be a generalist, we are Flood Insurance Nerds and this is the only type of insurance we write, don’t you want an expert?

Many Lloyds of London Nationwide flood insurance offering.

Any given year there is flooding in the US and this is a Nationwide problem. Floods can occur anywhere in the country, below are some of the most common events that lead to flooding:

• Storm surges in hurricane-prone areas.

• Flash flooding, caused by intense rainfall.

• Mudslides, caused by long, heavy rain periods on a hill or mountainside.

• Snowmelt, caused by the still-frozen ground unable to absorb excess water.

• Ice jams, when an ice chunk flowing in a river or stream blocks, dams or narrows passageways.

• Urban development, such as new construction and or ground paving, which alters the flood waters by not allowing the land that might absorb excess flood waters.

What are your commercial Flood insurance options?

The National Flood Insurance Program (NFIP) has had a monopoly on the flood insurance market for more than a decade.

Most of the insurance companies you are familiar with Nationwide flood insurance, State Farm Flood insurance, Progressive flood insurance, for example, are operating under a federal program called the WYO that allow these companies to basically resell the NFIP or government option at no risk to them.

FEMA flood insurance coverage

It should be understood that when the NFIP was originally envisioned by Congress in 1968 as a way for the government to assist in coverage of properties that are in flood-prone areas since most private companies didn’t have the capital to handle a catastrophic nature of flooding.

Unfortunately, due to ill-considered nationalization of the flood insurance program, this allowed properties to be built in areas that are prone to flooding because uncle sam (AKA you as the taxpayer) will bail out these properties and we have had over 50 years of construction in these flood-prone areas.

Statistics extracted and extrapolated from FEMA statements and website: https://www.fema.gov/loss-dollars-paid-calendar-year.

As of January 2018, the NFIP’s total claims-paying ability stood at just $14.66 billion, including $9.9 billion in borrowing authority.

Private commercial flood insurance

We are most excited about what is going on within the commercial flood insurance offering within the private flood insurance companies thus making this a very attractive alternative to the NFIP flood insurance coverages.

The most notable being the significant savings we are seeing for commercial properties.

Many of the commercial flood insurance option we will shot simplify the administration of a stand-alone commercial flood insurance policy.

Key Benefits to Private commercial flood insurance.

• One master policy covering all your properties instead of many individual NFIP policies.

• Intern creating one renewal date rather than the scattering across many months as we have seen on the NFIP policies.

• Replacement Cost Value (RCV) coverage instead of Actual Cash Value (ACV).

• Option to include business interruption or loss of rents coverage this is new to flood insurance and then NFIP policy doesn’t offer this kind of coverage

• Some of our options have no limitations on coverage for subgrade grade floors.

• Most of our options are “A” domestic surplus lines carriers

Most of the time coverages offered through one of our many Lloyds of London flood insurance options are broader and help close the coverage gaps that a standard NFIP policy often have.

It is good to note that the NFIP intents to increase their premiums by 20% per year for commercial flood insurance policies this is another reason to let us shop for your commercial property on the private flood insurance market

Flood insurance commercial contents coverage

On a commercial flood policy, contents coverage pays for damage to inventory, merchandise, machinery, and other contents up to $500,000.

Commercial property flood insurance

A commercial property flood insurance policy is designed to protect your business if your floors, walls, ceilings, equipment and fixtures as well as furniture, inventory and business property sustain floodwater damage.

Property outside your building generally will not be covered. For instance, landscaping and septic systems will not be covered.

In addition, flood insurance will not cover damage to your business vehicles, but this can be included in the optional “comprehensive” portion of your business vehicle insurance.

Financial losses caused by business interruption or loss of use of insured property are also not covered on the NFIP but some Commercial Private Flood Policies will offer this coverage.

Maximum flood insurance coverage for commercial property

Historically the maximum flood coverage offered for a commercial property through the NFIP monopoly was and still is $500,000 for the building and $500,000 for contents.

However, claims are typically paid out on ACV. And if your lender required more coverage then you would need to get Commercial Excess flood coverage.

Through the Private flood insurance market for commercial properties depending on the option we find, we have commercial private flood insurance options that max 2.5 million, 5 million and at 14 million coverage removing the need to purchase an excess flood policy.

Commercial excess flood insurance

The private market flood insurance option has been around for many years but been limited to commercial excess flood insurance coverage to cover risks that are much higher than the NFIP Commerical coverage cap.

This was done by attaching the excess flood coverage above the NFIP limits.

Commercial flood insurance quotes

We have many options that we shop for your commercial flood insurance policies since we specialize only in flood insurance (its the only insurance we write) we guarantee that we will show all option in your area for your risk to ensure that we are bringing the best solution to meet your loan requirement but more importantly to cover the risk of flooding to protect your assets and give you peace of mind.

As a business owner, you typically are not just responsible for yourself but for your clients, employees, and community you serve.

Not to mention your legacy by providing for your family. Don’t be short sided when it comes to getting the insurance coverage you need to protect your assets.

Commercial condo flood insurance requirements

With the NFIP the maximum amount of coverage you can get when in a commercial Condominium Association is $500,000.

It is good to know that the NFIP does not allow individual commercial condo unit owner to purchase coverage beyond $500,000 so if the Association has already purchased a commercial condominium Master policy at the maximum of $500,000 for the building then you can’t insure the building beyond this maximum.

The NFIP sees this as just a commercial flood insurance policy. Our private flood insurance options might be a better fit to cover your risk.

Flood insurance requirements for commercial loans

If your loan is from a federally regulated financial institution and the property is located in a high-risk flood insurance rate map (usually zone A and V) these areas are knowing to the banking industry as special flood hazard area (SFHA).

This is federal law and there are few institutions that have figured a way around this mandate.

All banks should run a Standard flood zone hazard determination (FZD) and if the property in question comes back within a zone A or V then you will be required to get flood insurance in order to get your loan.

Although it is standard protocol for lenders to pull these FZD’s we have found that many pull them way too late in the loan process and most buyers find out at the last hours before they will be closing their loan that they need to get a flood policy or the closing will be delayed or some won’t even give the closing date until the borrower (you) has met the flood insurance requirements for commercial loans.

This mandatory purchase of flood insurance by lenders applies to lenders of condominium units (both residential and commercial) and cooperative units.

However, these condo flood insurance requirements are a whole different beast so I have broken them into other blog posts which can be accessed by the links below.

RCBAP Flood Insurance / Master Flood Insurance for Condominium Association

 – and –

How to Explain RCBAP Flood Insurance to Your Condo Association

Commercial flood insurance rates

If your business is located in a designated flood zone by the Federal Emergency Management Agency (FEMA), a commercial flood insurance policy should be purchased as soon as possible.

If you are renting office space, it’s important to keep in mind that your landlord’s insurance coverage will only cover damage to the physical building and will not extend to property damage within your office.

The only instance where your landlord’s insurance will cover in-office damage is if the flooding is due negligence on their part.
If your business is starting small and you are operating out of your home, it’s vital to note that your home insurance policy will not cover any flood damage, even if your policy has a rider that specifically protects your business property.

Instead, a designated flood insurance policy is required for both personal and business assets.

To ensure your business is covered from all flood-related damages, contact our professionals at Better Flood Insurance. With us, you can save up to 50% on your premiums and get better coverage.

Call our flood insurance professionals or visit our website to get a quote today!