Understanding your commercial flood coverage options
Most business insurance policies don't cover losses resulting from floods, and if you're located in a low-risk flood area, you might be tempted to bypass this important coverage. However, flooding can occur anywhere – it's not limited to just coastal areas or river basins. The cost of damages from a flood could submerge your business permanently.
If you've invested money in equipment or a building, flood insurance is vital to protecting your business.
National flood insurance protection
In 1968, the National Flood Insurance Program (NFIP) was established by Congress to help property owners protect themselves from the financial devastation of floods. Communities all over the United States participate in the program by practicing floodplain management to reduce potential flood risks. In return, the NFIP provides flood insurance to business owners, homeowners and renters in those communities.
Coverages and rates are set by the NFIP, and do not vary from company to company. Flood insurance rates are determined by factors such as the type of construction and age of your business property, number of floors and building occupancy, as well as your area's level of risk as determined by the Federal Emergency Management Agency (FEMA).
National flood insurance is backed by the federal government and can be purchased through your agent. Once purchased, there is a 30-day waiting period (established by FEMA regulations) before your flood insurance takes effect. So, it pays to buy coverage well before water threatens to flow under your door.