Commercial flood insurance is highly specific and available through the National Flood Insurance Program (NFIP) or through some private insurers. Be sure to take note of what’s covered by flood insurance, and what isn’t.
The primary function of your flood insurance is to cover you for damage to your building and its contents caused by a flood. The flood source could be:
- Overflowing rivers/streams
- Heavy/prolonged rain
- Storm surge
- Snow melt
- Blocked storm drainage systems
- Broken dams/levees
Flood insurance also can cover damage from mold or mildew that may occur after a flooding. Mold or mildew existing prior to a flood will obviously not be covered. What else doesn’t flood insurance cover?
- Damage to property outside your business (landscaping, septic systems)
- Damage to business vehicles (this may be covered in a comprehensive business auto policy)
- Financial loss due to business interruption or loss of use
If you aren’t required to purchase flood insurance, you should do some research into your business’s risk of flooding. Is it located in or near a flood zone? Where in the building is equipment/inventory located? The lower the materials are, the higher chance of them being damaged in a flood.
In terms of actual protection, commercial flood insurance plans cover you up to $500,000 for your building and up to $500,000 for its contents. If you need more coverage than this, you can purchase excess insurance coverage which can insure your business up to much higher limits. While some business owners will be required to get commercial flood insurance, those who aren’t should still explore their options, and do the most to protect themselves and their business.