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Commercial Flood Insurance Policy Information

Commercial Flood Insurance

Commercial Flood Insurance. Your business is one of your most prized possessions. You invest your time, money, blood, sweat and tears that you put into it. Because of this, you should take all the necessary measures to ensure that your business is covered against loss from the different types of risks. Getting a commercial property insurance is a great start. However, did you know that commercial property insurance does not cover damage from a flood?

commercial flood insurance. Given that floods are naturally occurring and more often than not come without notice, it is essential to have business flood insurance for your commercial property depending on its location. As you look into the insurance provider options that you have, some of the vital information that you should know includes:

For flood insurance definitions, see: Insurance Flood Terms Glossary.

Does your business need commercial flood insurance? Commercial property insurance does not include flood coverage, so if your business located in or near a flood zone you should strongly consider it.

Below are some answers to commonly asked business flood insurance questions:


What Is Commercial Flood Insurance?

Commercial flood insurance is a type of insurance policy designed specifically to protect businesses and commercial properties from financial losses due to flood damage. This type of insurance provides coverage for damage to a commercial building, its contents, and any equipment or machinery within the building.

Commercial flood insurance policies typically include coverage for direct physical losses caused by floods, including water damage, as well as loss of business income and additional expenses incurred during the recovery process.

This type of insurance is typically purchased by business owners who operate in areas that are prone to flooding or are considered to have a high risk of flooding.

How Much Does Commercial Flood Insurance Cost?

The average price of a standard Commercial Flood Insurance Insurance policy for small businesses ranges from $67 to $99 per month based on location, flood zone, square footage, construction type and more.

Flood insurance premiums are determined by the chances of your business being flooded and how much flood damage can be done - up to the policy limits. The biggest factor in the premium is what flood zone your business is in, followed by how much you want to insure. Flood insurance pricing is complex and you need to speak with an agent to get an accurate quote.

The actual amount that will be covered depends on the value of the property and the extent of the loss. Those who are in low-risk flood areas end up paying lower premiums for commercial flood insurance, while those in high-risk areas pay more. Also, the premiums can also be affected by factors such as the age of the building, number of floors and also the location of the contents in the building.

In instances where one's business needs a cover of more than $500,000, they can opt to have extra coverage. Such would mean that you purchase an excess flood insurance policy which covers up to $1 million for more premium.

Who Provides Commercial Flood Insurance?

Flood insurance is mostly provided by the federal government through the National Flood Insurance Program (NFIP). The insurance policy by the NFIP will cover all types of floods including flash flooding, storm surges, mudslides or snowmelt.

NFIP is provided by insurance professionals on behalf of the federal government. Apart from the NFIP, there are private insurers who offer coverage against loss occasioned by floods. Therefore, you can look into both options then get to determine which insurance provider will meet the needs of your business.

FEMA usually requires a 30-day waiting period for new business flood insurance policies. That means it's important to buy a commercial flood policy before a possible flood event is headed in your direction.

What Is Covered By Commercial Flood Insurance?

Generally commercial flood insurance covers damage to your building and contents caused by flood. This includes losses resulting from water from over flowing rivers or streams, rain, storm surge, snow melt, blocked storm drainage systems, broken dams or other like causes. To be considered a flood, waters must cover at least two acres or flood at least two properties.

Both the building and its contents can be covered for up to $500,000 For primary coverage on buildings, the coverage would includes repairing or replacing things such as a damaged air conditioning, water heaters or electric systems. On the other hand, the contents in the building that will be replaced include machines on the property, inventory, and also merchandise.

What Isn't Covered By Commercial Flood Insurance?

Beyond knowing what your insurance will cover, it is also necessary to know what is not covered by your commercial flood insurance policy. Most of flood insurance does not cover the loss of property outside your building. To add on that, if you take an insurance coverage provided by the NFIP, they do not offer Business Interruption coverage. This means that the insurance will not compensate you for the income losses suffered when the business was closed down.

The good news is there are private insurers who provide Business Interruption coverage. Also, one can opt to purchase the excess commercial flood coverage. This coverage includes compensating the business for the time period which they did not operate.

Who Should Consider Buying Commercial Flood Insurance?

Commercial flood insurance can be purchased by anyone who has a business in a commercial location. In some instances, business flood insurance is mandatory. Some businesses are located in high-risk areas or have a mortgage which is federally regulated by an insured lender must have flood insurance.

You find out if your business is in a high-risk area by looking at the FEMA Flood Map Service Center Flood Map. Use this link to find your official flood map, access a range of other flood hazard products, and take advantage of tools for better understanding flood risk.

The map highlights places which are more prone to experience floods. This helps businesses tell if they need to get a commercial flood insurance policy and which type of coverage they should get.

What Do NFIP Acronyms Mean?

Here are some of the common acronyms used in the National Flood Insurance Program:

NFIP Acronym Meaning
AADAnnual Average Damage
ABFEAdvisory Base Flood Elevation
ADMPArea Drainage Master Plan
ANIArea Not Included
ARIAverage Recurrence Interval
ASDSOAssociation of State Dam Safety Officials
ASSPMAssociation of State Floodplain Managers
BFEBase Flood Elevation
CACCommunity Assistance Contact
CAPCommunity Assistance Program
CBRACoastal Barrier Resources Act
CBRSCoastal Barrier Resources System
CCOConsultation Coordination Officer
CDBGCommunity Development Block Grant
CFRCode of Federal Regulations
CIFContracts In Force
CFSCubic feet per second
CLOMAConditional Letter of Map Amendment
CLOMRConditional Letter of Map Revision
CLOMR - FConditional Letter of Map Revision Based on Fill
COE(U.S. Army) Corps of Engineers
CRSCommunity Rating System
DFCODeputy Federal Coordinating Officer
DFIRMDigital Flood Insurance Rate Map
DFODisaster Field Office
DHSDepartment of Homeland Security
DLGDigital Line Graph
DOBDuplication of Benefits
DSRDamage Survey Report
EISEnvironmental Impact Statement
EMCEmergency Management Coordinator
EOExecutive Order
ERMElevation Reference Mark
ESDPEngineering Study Data Package
FBFMFlood Boundary and Floodway Map
FCOFederal Coordinating Officer
FDPAFlood Disaster Protection Act
FDTFloodway Data Table
FEMAFederal Emergency Management Agency
FFEDFinal Flood Elevation Determination
FHBMFlood Hazard Boundary Map
FHMOFederal Hazard Mitigation Officer
FIAFederal Insurance Administration
FICOFlood Insurance Claim Office
FIMAFederal Insurance and Mitigation Administration
FIRMFlood Insurance Rate Map
FISFlood Insurance Study
FMAFlood Mitigation Assistance Program
FMSISFlood Map Status Information System
FMVFair Market Value
FOIAFreedom Of Information Act
FONSIFinding Of No Significant Impact
FPAFlood-Prone Area
FPIForce Placed Insurance
FPMFloodplain Management or Manager
FZDFlood Zone Determination
GFIGroup Flood Insurance
GISGeographic Information System
GPOGovernment Printing Office
GSEGovernment Sponsored Enterprise
HAZUSHazards United States
HECHydrologic Engineering Center
HMGPHazard Mitigation Grant Program
HMOHazard Mitigation Officer
HUDHousing and Urban Development
IAIndividual Assistance
ICCIncreased Cost of Compliance
JFRJoint Final Rule
KCFSThousand cubic feet per second
LAGLowest Adjacent Grade (to a structure)
LFDLetter of Final Determination
LMMPLimited Map Maintenance Program
LODRLetter of Determination Review
LOMALetter of Map Amendment
LOMCLetter of Map Change
LOMRLetter of Map Revision
LOMR-FLetter of Map Revision Based on Fill
MHIPMulti-Year Hazard Identification Plan
MSCMap Service Center
MTMitigation Directorate
NAVDNorth American Vertical Datum of 1988
NFIPNational Flood Insurance Program
NFIRANational Flood Insurance Reform Act
NGVDNational Geodetic Vertical Datum of 1929
NNNon-participating NFIP community
NSFHANo (or Non) Special Flood Hazard Area
OMBOffice of Management and Budget
OPAOtherwise Protected Area
PDAPreliminary Damage Assessment
PLPublic Law
PMFProbable Maximum Flood
PMPProbable Maximum Precipitation
PMRPhysical Map Revision
PRPPreferred Risk Policy
RCBAPResidential Condominium Building Association Policy
RLSRepetitive Loss Structure
SCOState Coordinating Officer
SDFSpecial Direct Facility
SEMAState Emergency Management Agency
SFHASpecial Flood Hazard Area
SFHDFStandard Flood Hazard Determination Form
SFIPStandard Flood Insurance Policy
TECTechnical Evaluation Contractor
TBTechnical Bulletin
USACEU.S. Army Corps of Engineers
WYOWrite Your Own


What Does Commercial Flood Insurance Cover & Pay For?

Here are a few examples of commercial flood insurance claims and how insurance can help pay for the losses:

A restaurant owner experiences flooding due to heavy rain and the rising of nearby rivers or lakes. The flood causes damage to the building structure, furniture, equipment, and inventory. With commercial flood insurance, the owner can file a claim to cover the costs of repairs and replacement of damaged property, including lost income due to the closure of the business during repairs.

A small business owner operates a retail store located in a flood-prone area. During a severe storm, floodwater damages the store's merchandise, furniture, and fixtures. The business owner can file a commercial flood insurance claim to cover the cost of repairs and replacements.

A manufacturer experiences flooding in their warehouse due to a nearby river overflowing its banks. The flood damages the machinery and raw materials, causing significant business interruption. With commercial flood insurance, the manufacturer can file a claim to cover the cost of repairs or replacement of damaged machinery and raw materials.

In each of these examples, commercial flood insurance can help business owners recover from the financial losses caused by flooding. The insurance policy can cover the cost of repairs or replacement of damaged property. Without commercial flood insurance, business owners may face significant financial hardship and potentially even bankruptcy due to the costs of repairing damage caused by flooding.

Commercial Flood Insurance - The Bottom Line

Natural disasters can be devastating to a business. Damage caused by some types of natural events like lightning or wind will usually be covered by a commercial property insurance policy. But your business needs a special commercial flood policy if you want protection from damages from flooding. It ensures that you are covered against losses or damage, to your building or the contents in it, following a flood.

Additional Resources For Commercial Property Insurance

Read up on small business commercial property insurance, including how business property insurance protects your company's building's and/or their contents from damage, destruction, theft and vandalism.


Commercial Real Estate Insurance

Commercial property insurance is a type of insurance that provides coverage for businesses against losses or damages to their business property. This can include buildings, equipment, inventory, and other assets owned by the business.

There are several types of commercial property insurance, including standard property insurance, business interruption insurance, and contents insurance.

  • Standard property insurance covers damages to the physical structure of the business, such as the building, walls, and roof.
  • Business interruption insurance covers lost income and expenses incurred during the repair or rebuilding process.
  • Contents insurance covers damages to personal property within the business, such as office equipment and furniture.

Commercial property insurance is important for businesses of all sizes, as it helps protect against financial losses due to unforeseen circumstances, such as natural disasters, theft, or vandalism. It can also provide liability coverage in case of accidents or injuries on the business property.

To determine the appropriate level of property insurance for a business, it is important to consider the value of the business's assets, the location of the business, and the potential risks it faces. Many businesses choose to work with an insurance agent or broker to help identify the best coverage options for their specific needs.

Overall, commercial property insurance is a crucial part of any business's risk management strategy, helping to protect against financial losses and ensuring the long-term viability of the business.

Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income and Extra Expense, Employee Dishonesty, Money and Securities, Accounts Receivable, Computers, Signs, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Hired and Non-owned Auto & Workers Compensation.

Other commercial insurance policies to consider: Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Contractors' Equipment, Fine Arts, Cyber Liability, Employment-related Practices, Automobile Liability and Physical Damage, and Stop Gap Liability.


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