Six Facts About Commercial Flood Insurance

Jul 12th, 2017 | By | Category: Commentary

By Mountain America Credit Union

Most flooding in the United States occurs when the weather is warmer during the spring, summer and fall months—prime traveling months. According to ustravel.org, in 2016, direct spending in the U.S. by resident and international travelers averaged $2.7 billion per day. Given this statistic, the last thing you want is for your business to close while you cope with how to pay for flooding damages.

The Federal Emergency Management Agency (FEMA) has estimated that almost 40 percent of small businesses never reopen after experiencing a disaster. Tens of thousands of dollars in damage can be caused by just a few inches of water. According to FEMA, from 2006–2010, the average commercial flood insurance claim was just over $89,000. Many small business owners cannot recover from that type of setback. Of those that do, only 29 percent are still operating two years later.

Flood insurance could be the protection you need. As we enter the summer season, here are five things to know about commercial flood insurance:

  1. Most business property insurance policies do not cover damages resulting from floodwater.
  2. Flood insurance is available through the National Flood Insurance Program (NFIP) and is managed by FEMA. Coverage can be purchased through your commercial insurance agent. There is generally a 30-day waiting period on new flood insurance policies, so now is the time to secure this important coverage.
  3. If your business has a mortgage from a federally regulated or insured lender and is located in a high-risk flood area, you are required to have flood insurance on the property. Businesses located in moderate- or low-risk areas are not federally required to carry flood insurance but it is usually recommended.
  4. A commercial flood insurance policy covers damages resulting from floodwater due to snow melt, storm surges, heavy or prolonged rain, blocked storm drainage systems, broken levees or dams, and overflowing streams or rivers.
  5. This type of policy will cover damages that occur to the building and physical contents of that building, such as fixtures, equipment, inventory and furniture. It will not cover damage to property outside of your building (i.e. landscaping, septic systems), financial loss due to business interruption or damage to business vehicles. Your insurance advisor can provide guidance on what coverage you need to fill these gaps. 
  6. Flood insurance is affordable and it’s easy to add to your current insurance portfolio. Just contact your commercial insurance agent.

The peace of mind that comes with a business insurance policy is well worth the expense, even if you’re operating a small business in a seemingly low-risk industry. After all, no one can predict the future. One natural disaster or burglary could force your business to close its doors. Luckily, with the right coverage, your business will remain on track even if the worst should happen.

Mountain America Credit Union is a full-service financial institution committed to putting our members’ needs first with branches across southern Idaho.

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