Does your business have enough flood insurance coverage? Flooding is a risk to any business, whether you are inland or near the coastline. In fact, in the past five years, all 50 states have experienced floods, and at least one in four businesses that shut down from a natural disaster never reopens.
A general policy will not cover flood damage, and this type of insurance is only available through the National Flood Insurance Program (NFIP). The NFIP will cover various types of flooding, including mudslides, though it is important to note that it does not cover landslides even if they are caused by heavy rain. To make sure you get a fair price, every commercial flood agent answers to this government agency; therefore, flood insurance is backed by the government but sold through private insurers.
There are plenty of misunderstandings about flood insurance, one point being limits. Did you know the National Flood Insurance Program (NFIP) allows for a maximum dwelling limit of $250,000 for residential homeowners and up to $500,000 of building coverage for commercial businesses? Allie D’Andrea of Brown & Brown’s New Orleans office gives her Advisor Insight on Excess Flood Insurance:
“Many of our clients ask what they can do to insure the rest of their property. For instance, if your home would cost $750,000 to rebuild, the NFIP policy leaves you with a $500,000 gap in coverage. Similarly, if you own a commercial building that has been appraised at $2,500,000 to rebuild, only $500,000 of building coverage is going to leave you high and dry (no pun intended) should your building experience a substantial amount of flood waters. So, how can you fill in those gaps in coverage to ensure that you will have enough insurance to return your property to its original state after a flood loss? The answer is simple but widely unaddressed. Many home and business owners that I have the pleasure to visit with are not aware of the excess flood coverage options that are available to them. Both residential and commercial property owners have the opportunity to purchase excess flood coverage through private flood programs. There are many different programs that your agent can compare in order to assess the most cost-effective coverage.”