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Does Your Business Need Flood Insurance?

By Christopher Coble, Esq. on March 26, 2015 | Last updated on March 21, 2019

According to the National Oceanic and Atmospheric Administration, the lower Missouri River basin, the Ohio River basin, and parts of western New York and eastern New England may face floods this spring. The National Flood Insurance Program warns that just a few inches of flood water can cause thousands of dollars in damage.

Is your business protected in case of a flood? If a flood damages not only your building but also your supplies and products, do you have the money to cover the costs?

With one in four businesses shutting down permanently after a natural disaster, do you need flood insurance?

I Have Commercial Property Insurance.

Many business owners believe that they don't need flood insurance because they already have commercial property insurance. This is a mistake.

Although commercial property insurance does protect against some water damage, it does not cover flood damage. Commercial property insurance will only cover damage from water that did not hit the ground first before it reached your business. Examples of covered water damage include:

  • A water pipe explodes inside your building.
  • Heavy rain collapses your roof and covers everything inside with water.
  • A gigantic hail ball smashes your window, and rain and hail floods the inside of your building.

Remember, if the water damage comes from above, it is usually covered by most commercial property insurance policies.

Flood Insurance for Flood Damage

However, if the damage to your property comes from water rising up, you need flood insurance. Essentially, if the water hit the ground before it entered your business and destroyed your property, this is covered by flood insurance. Examples of damage covered by flood insurance include:

  • A river overflows.
  • A flash flood causes a mudslide into your business.
  • A sewer is clogged and backed up water cascades into your basement.

Most flood insurance policies will cover damage to your building, and some will even cover damage to your merchandise and equipment inside your building.

If you are looking to buy flood insurance, you can check with the National Flood Insurance Program, which regulates the sale of flood insurance. Your business does not need to be located in a flood zone to buy flood insurance. Since most policies have a 30 day waiting period before the policy is effective, do not wait until a flood warning to buy insurance.

If you do have flood insurance, but are having a hard time dealing with the insurance carrier, an experienced insurance lawyer may be able to help.

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