No matter what your business sells, water can do a lot of damage to your inventory, profits, and company.
Retail store owners rely on insurance to recover after a flood damages their buildings and stock—and without the right coverage, your business may never get back up and running again. Attorney Bill Voss explores the many ways Texas business owners can suffer water damage and how to get adequate payment from an insurer.
When Will a Commercial Insurance Policy Cover Flood Damage?
Water typically damages a business in one of two ways: a weather event that leaks into the structure, or something inside the structure leaking out. Commercial property damage insurance will usually cover damage caused by internal factors, such as a broken water pipe, faulty sprinkler system, defective HVAC system, or a backup in the city’s water main or sewer system. In some cases, thee policies may also cover non-flooding weather events, such as rainwater entering through a hole in the roof.
A standard commercial policy for non-flood water damage may cover:
- Cleanup. Cleanup crews are needed immediately to shut off electricity, set large fans to dry out standing water, install temporary dehumidifiers, rip out soaked carpets and padding, and otherwise salvage business holdings.
- Subfloor replacement. Even minor leaks can have major consequences if they are not adequately corrected. Standing water can seep into the sub-floor and climb into studs and walls, weakening the wood and making floor collapse more likely.
- Mold prevention. Moisture that becomes trapped in the floors and walls will encourage mold growth, potentially poisoning your customers and staff.
- Inventory losses. Once it is safe to enter the damaged area, owners and staff must work to preserve any undamaged items, including computers, inventory, sales records, equipment, tools, furnishings, and store fixtures.
What Does a National Flood Insurance Program Policy Cover?
Private insurers do not offer coverage for flood damage caused by disasters. The only way to get compensation for these kinds of floods is through the National Flood Insurance Program (NFIP). This federally-funded program offers policies to both commercial and residential property owners, and can cover up to $500,000 in property damage and $500,000 to restore the building’s contents. Just as with other claims, policyholders will have to pay a deductible before their claim can be settled.
Commercial flood policies offered by the NFIP typically provide coverage for:
- Damage to the store, building, and foundation.
- Electrical, plumbing, and HVAC systems for the store.
- Damaged appliances (such as sewing machines, refrigerators, or other specialized equipment).
- Replacement of carpeting and hardwood floors.
- Damaged display cabinets, bookcases, or paneling.
- Broken windows and damage to window coverings.
- Debris removal.
- Professional drying and sanitation services.
What Is Not Covered Under a NFIP Policy?
A flood policy can be a lifesaver when waters rise, but these policies do not cover all types of loss. For example, coverage for basements, crawl spaces, and other underground areas of the property is usually limited. Even if damage to items in these areas are not excluded, it is unlikely that policyholders will recover the full value of items stored at the underground level.
In addition, NFIP policies typically do not cover:
- Loss of use or business interruption coverage. This provides payment to owners who suffer a drop in sales in the weeks and months after a fire.
- Exterior damage. The NFIP will typically not compensate owners for damage to landscaping, parking lots, walkways, and external non-structural damage.
- Lost valuables. Any currency, precious metals, stock certificates, heirlooms, or high-value items are not covered under NFIP policies.
Flood damage claims often give rise to complicated and frustrating insurance disputes. insurers will do everything they can to deny or underpay claims, costing owners millions out of pocket that could ultimately cause them to lose the business. If your insurer is attempting to deny your flood damage claim, we can examine your policy to determine how much you may be owed. Fill out the form on this page today to contact the Voss Law Firm or order a free copy of our book, Top 10 Mistakes You Cannot Afford to Make When Filing Your Insurance Claim.
