According to the National Flood Insurance Program, floods are the most common and most costly disasters in the United States.
While flood insurance may seem like it would come standard as a part of your normal policy, many business owners are shocked to find out that flood insurance is a separate policy that can be added, but is not automatically added.
Does Business Insurance Cover Flood Damage?
In short, the answer is no. Business insurance alone does not cover damage from flooding, as flood damage is a separate insurance that needs to be added to the policy. However, it does cover water damage as a peril.
Water Damage VS. Flood Damage?
While it may seem confusing, water damage and flood damage are different. However, it is important to know because if you do not have the right coverage for the damage, it may not be covered.
Water damage could be from severe rain soaking through the roof causing a leak or even a washing machine overfilling. This could be a pipe bursting and cause water damage to the walls. Luckily, this is covered by your standard property insurance. Generally speaking, these instances would be covered because they could not be prevented by the business owner.
Flood damage is slightly different. To be considered a flood damage, flood water must accumulate outside the business then seep into the business property and cause damage. This means that there needs to be an unusual and rapid accumulation of water in the property. This can be caused by tidal waters, mud, or even runoff of surface water.
Is Flood Insurance Different from Property Insurance?
In most cases, business insurance doesn’t cover flood damage as it is an add-on. However, it is necessary. Almost 20% of flood claims are in low-risk flood areas and are buildings that have never been flooded before. This includes the building, inventory, and equipment lost in the flood.
In some cases, your mortgage company will require flood insurance on the property to protect themselves as well as your company. However, with that being said it will cover damages within the building, but not outside of the property. This means shifting of land caused by flooding, landscaping, and equipment outside of the building. Company vehicles will also be excluded from the policy as that would be under the auto policy instead of flood insurance.
How Can You Prepare for a Flood in your Business?
While natural disasters can feel impossible to prepare for, there are a few ways to prepare your business as much as possible.
- Purchase flood Insurance 30 days prior to the flood period. While this may be impossible to know weeks before a disaster strikes, most policies take 30 days to activate.
- Purchase materials to protect your business. This includes sandbags, water-resistant PVC boards to go over doors and windows, and flood shields for ventilation shafts and other openings.
- Have all electronic data backed up. Information that was stored on computers left in the building may be destroyed and all the data lost. It is important to have a hard drive available to save the information.
- Have a plan in order for when the storm passes. This would include having money to pay all employees, knowing a good company to restore the damage, and identifying a good support system of people who can help restore your business.
What To Do If You Experience Commercial Water Damage?
This can be a scary occurrence, but there are steps you can take to get through this time. Hopefully, you have plans in place for this emergency, but these steps are still applicable if not. The first step is identifying the source of water. This may be a toilet, rain, a refrigerator, or a pipe. It may become necessary to turn off the water main until you can clean up the damage and get everything in order. Take pictures of the damage once it is found and immediately contact your insurance company. A restoration team should be sought out immediately to repair the damages before more problems are caused by water damage.
How Do I Get Flood Damage Covered?
To get flood damage covered, contact your insurance company and add flood insurance to your policy. The 30-day period will still be in place before the policy is activated. However, the flood damage will not be covered if you add the policy after the damage is done. The best option is to get flood insurance for your business before anything happens.
Insurance to Help Protect Your Business from Water Damage?
Water damage is already covered under your commercial insurance policy. This means there is no need to have an additional policy to cover water damage.
Call G&G today to get a quote for your commercial insurance and flood insurance.