In many parts of the world where floods are experienced on a regular basis, commercial flood insurance is a necessity. It is very risky for business owners in the State of Florida to operate without this type of cover. This is because floods can cause extensive damage to buildings and their contents. According to official figures, nearly 40 percent of small firms never reopen after business premises get flooded. This is because even a few inches of flood water can cause extensive damage amounting to tens of thousands of dollars. Flood insurance is normally purchased separately from commercial property insurance. This is largely due to the fact that most property insurance policies do not offer flood coverage. It is therefore important for business owners to check their policies to make sure that they have sufficient flood cover.
Causes of Flooding
Flooding normally occurs when there is heavy rainfall. Blocked storm sewers can also cause flooding in certain areas. A modification of the drainage pattern of a region can also lead to flooding. Whatever the cause, commercial property owners and business owners should find a commercial insurance agency to help them procure the right policy.
Calculation of Flood Insurance Premiums
There are many factors that come into play when calculating premiums for flood insurance. For instance, the flood zone where the property is located has a very big impact on premiums. Generally, flood zones are divided into high-risk, low-risk and medium risk zones. Properties located in high-risk areas attract higher premiums and vice versa. The year of construction of the building, its occupancy and number of floors are also considered when calculating premiums. The value and location of items in a building also affects premiums.
When to Buy Flood Insurance
Commercial flood insurance policies normally have a 30 day wait period. This means that purchasing a policy in Florida when heavy rains start falling in the area will not be of any help. The best time to procure flood insurance is immediately after a business goes into operation. A standard policy will cover damage on the structure of the building as well its contents. Commercial flood insurance claims vary depending on the amount of cover purchased. However, the average flood insurance claim over the last few years has been around $85,000.
What to Consider When Looking For Flood Insurance
The coverage limits for a building and its contents must be considered when looking for coverage. This is simply the amount of money that the business owner will receive as compensation when flooding occurs. The amount of premiums paid for a certain amount of cover can be reduced when deductibles are factored in. For instance, commercial property with items kept on the first or second floor can get huge discounts because of the low risk flooding poses to the contents of the building.
According to the National Flood Insurance (NFIP) Program, owners of commercial property can get up to $250,000 in building coverage and up to $100,000 in contents coverage. Commercial properties that qualify for NFIP include real estate owned property, farms, apartment buildings, residential buildings for more than 4 families, and office buildings among other commercial properties.
Florida is no stranger to floods. With flash floods and adverse weather, you need to make sure your business is protected with the right type of commercial flood insurance. Many business owners are not aware of the fact that their commercial property and contents insurance specifically excludes flood damage. This means that any damage that is caused by a flash flood or the runoff of water will be denied by your standard business insurance. Understand how to find commercial property insurance that will cover floods and make sure you are protected under all circumstances.
Finding a Flood Insurance Program
Several different insurance agencies in Florida offer a flood insurance program designed for commercial property and contents. This specialized insurance plan is offered throughout the state and each area is categorized as a flood “zone”. If your property is in an area that is more prone to flooding, you will be in a higher premium zone. The policy may not pay for all of the damages sustained but it will reduce your risks and the amount you will have to pay out-of-pocket substantially.
What is Covered?
There are two different types of commercial flood insurance. One plan will cover the building and the other will cover the contents in the building. Contents are usually defined as anything that is not permanently fixed to the structure. Here is a breakdown of what is covered for deeper understanding:
- The building listed and the foundation of the building
- Furnaces and water heaters
- Built-in appliances
- Permanent flooring
- Cabinets, counter tops, and fixtures
- Detached buildings up to 10 percent of building cover
- Removal of debris caused by flood
- Business property like furniture and computer equipment
- Window treatments
- Portable appliances
- Area rugs
- Some valuable items up to the limits listed
- Merchandise onsite
- Merchandise in storage up to a limit
What is Not Covered?
Some items are not covered under your flood insurance policy. It is important to understand what exactly is excluded so you can prepare if you have to file a claim. Here are some things that are not covered:
- Mildew and mold damage that was preventable
- Money and precious metals
- Trees and plants around the insured property
- Property expenses to temporarily relocate
- Business interruption or loss of use
- Vehicles and their parts
You should understand the basics before you ever rule out the importance of carrying commercial flood insurance. Do not wait until hurricane reports hit the web because insurance companies will put a moratorium on insurance until the risk no longer exists. If you prepare ahead of time and you hear of a hurricane or the chances of a flash flood, you do not have to worry about whether or not your business will be damaged. Meet with an experienced commercial agent selling flood insurance and build a policy that suits all of your needs.
For current rates and ways to save money on insurance, Tampa Bay area business owners in need of adding commercial flood insurance to their commercial insurance policy should call Mid Florida Insurance Professionals at (813)962-3082 for a quick quote and excellent rates on all commercial insurance plans.