During Hurricane Harvey, homes were not the only structures seriously damaged by floodwaters. Thousands of businesses also sustained damage, much of which was not adequately covered by business property insurance. Like many homeowners, many business owners failed to consider business insurance for floods until it was too late.
Purchasing the right business insurance coverage that protects against flood damage should be a priority if you are a company owner in order to stay in business should this type of disaster strike.
How Floods Affect Small Businesses
According to FEMA, more than 40% of all small companies that sustain flood damage do not reopen due to the astronomical cost to repair, rebuild, and replace. After putting everything they have into their companies, some owners are cannot recover from flooding financial losses and must close their doors.
This will affect you as the company owner as well as how quickly the entire community will rebound from flood-related issues. The worst part about these situations is that most flood losses can be covered add flood coverage to your business property insurance.
Businesses Also Need Flood Insurance
One common mistake many company owners make is not being fully aware of the specifics of their current business insurance coverage. Business insurance policies do not cover flooding or rising water as a named peril. When damage occurs, many owners are surprised to learn that their losses are not covered and they will have to finance the repair and replacement of damaged property on their own.
As a company owner, you may find yourself in the same position as homeowners who did not purchase flood insurance no matter where y ou are located, not just in designated flood plains. This can be a grave mistake, as many business property insurance agents will attest. The official flood maps used by insurance companies to identify properties at risk are grossly outdated and actual flood zones extend far beyond the areas marked on these maps.
Getting the Right Flood Business Insurance
Protecting your business against flood damage requires a careful analysis of what protection your current business insurance policy provides. You should know what your policy covers, then supplement it as necessary. Some commercial carriers offer flood insurance for businesses located outside of a designated flood plain. In any case, it is an additional coverage that must be purchased and is not automatically provided. It is important to understand that some coverages, such as business interruption, exclude coverage if it results from flooding. That would have to be included under any separately purchased flood insurance.
If your company is located within a community that participates in the FEMA National Flood Insurance Program (NFIP), you can purchase a commercial flood policy that covers both property and possessions. The NFIP provides important business insurance coverage that other commercial policies to not provide. Owners must be enrolled in such a policy for at least 30 days prior to a flooding incident in order to qualify for benefits and must re-enroll every year.
The unfortunate aftermath of Hurricane Harvey and other catastrophic flooding events should illustrate the importance of having the right business property insurance in place, including flood coverage. As a company owner, you should review your business insurance policy yearly to ensure you have adequate flood business insurance coverage. This is a small price to pay for coverage that could make the difference between the ability to stay in business or having to shut your doors for good!