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Flood Insurance for Businesses

Flood Insurance for Businesses

Flood insurance is more important now than ever. Flood events across the country in the last few years are affecting not only homeowners, but also businesses. In August 2016, Louisiana experienced flooding that cost over $3.8 billion in losses. Included in that figure were over 6,000 businesses, many uninsured.

What many business owners don’t know is that flood is not a covered peril under your business package insurance policy. It also cannot be included in these policies.

Flood insurance is always a separate policy, but it can be purchased in different ways. Here is what you need to know about flood insurance for businesses:

Basic Flood Insurance

The National Flood Insurance Program (NFIP) offers basic flood insurance limits for businesses. Because this is a government program, coverage is limited to:

  • $500,000 or replacement cost value per structure at any one location, whichever is less.
  • $500,000 or replacement cost value in contents coverage per structure at any one location, whichever is less.

In addition, policies are limited to one structure per policy.  Even if your building is worth more than $500,000, the limit may not exceed $500,000.

Underwriting requirements include a flood elevation certificate, two pictures of the structure front and back and payment in full of the policy premium. Unless the insurance is for a loan closing, there is typically a 30-day waiting period before the policy goes into effect.

Private Market Insurance

While NFIP used to be the only game in town, this is no longer the case. There are private insurers available to insure businesses for the peril of flood.

The good news is that these insurers may offer higher limits for building and/or contents coverage for your business. The bad news is that there may be a higher premium investment than with NFIP.

Excess Flood Insurance

Many flood insurance carriers will limit the amount of coverage they provide. This may leave some businesses with a coverage shortfall, which is of concern to lenders, and should also be of concern to policyholders.

Because of these limits, it is recommended that excess flood insurance be purchased. This is a separate policy that picks up where the underlying NFIP or private insurer policy leaves off. The structure or structures and their contents may be insured to full replacement cost value.

Hayes Brokers will perform a risk management analysis and work with you to determine which flood insurance carrier can help insure your business property to value. Grab your elevation certificate and give us a call.


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