Is Your Business Insured For Flood Loss?

Melting snow and rains have caused flooding across the country. Businesses should make sure they have flood insurance, according to the Insurance Information Institute.

Standard business insurance policies provide coverage for disasters such as fire, lightning, hurricanes and winter-related damage including burst pipes, but flood damage is not included.  Flood insurance is available through the federal government's National Flood Insurance Program.  To purchase flood insurance, your business must be located in a community that participates in the National Flood Insurance Program. Fortunately, most communities do participate, and flood insurance is readily available.

"One of the biggest mistakes a business owner can make is not to buy flood insurance," said Loretta Worters, vice president of the Insurance Information Institute. "Business owners should contact their insurance agent to make sure they have the right type and amount of coverage."

Coverage Available

Coverage limits for a standard flood policy are $500,000 for the business structure and $500,000 for the business contents; coverage for structure and contents is provided on an actual cash value basis (i.e., the replacement cost of an insured item at the time of loss, less the value of depreciation). Deductibles range from $500 to $1,000, depending on the policy you buy.  Generally, if you buy a policy for a business located inside a floodplain (any area susceptible to being in-undated by flood waters), the deductible is $1,000, unless mitigation measure have been taken to protect the building.

Business owners should keep in mind that there is a standard 30-day waiting period from the date of purchase before a new flood policy goes into effect.  However, if you are taking out a mortgage or other business related loan and your lender requires flood insurance in connection with making, increasing, extending or renewing the loan, the waiting period is waived.