When you run a business, it can be difficult to know which cost-saving measures will be worth it. Many CEOs struggle with the price of their insurance coverage—especially when it comes to the optional extras—which is why many commercial ventures do not have the flood insurance coverage they need to survive an adverse weather event.
Attorney Bill Voss explains why flood insurance is a must-have for Texas businesses, even those who may not see its value.
What You Need to Know About Commercial Flood Insurance
According to research from the National Flood Insurance Program, one out of every four businesses that close their doors after major weather events such as floods never reopen. With this in mind, business owners should take a hard look at their policies and ask themselves the following questions regarding flood insurance:
- Am I required to purchase flood insurance? Some commercial properties that are located in a high-risk flood zones are required to carry flood insurance coverage, such as if the property was purchased through a federally-regulated lender.
- Am I already covered? Flood damage protection is typically not included in a standard commercial insurance policy such as a business owners policy, and must be purchased separately through a different insurer or as an addition to your regular policy. Even if you have coverage for other adverse weather events, the flooding generated by hurricanes or other covered events likely will not extend to flood damage.
- How much will it cost? All insurance rates are calculated on the degree of damage risk, which for flood insurance means your business location and weather patterns. Your insurer will assign you a rate based on your location on the flood plain map, as well as how much inventory is contained in the building and where in your building your inventory is located.
- What does it cover? Coverage varies from policy to policy, but typically covers damage to the structure and its contents. “Flooding” may be a result of rainwater or overflowing rivers, but may also apply to snow melting into your business or the overflow from a burst pipe. Some flood policies require that waters cover at least two acres or affect two properties to be considered a “flood.”
- What isn’t covered? Most flood insurance policies do not cover losses to property outside the building, such as landscaping, signage, driveways, or commercial vehicles Business interruption losses are also typically not covered.
Even if your business has never flooded before, you should strongly consider making this additional purchase to protect your business. If you purchased a flood policy and your insurer is attempting to deny your claim, 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.
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