Flood and Earthquake

Natural disasters can be devastating to businesses. While damage caused by some types of natural events—such as lightning or wind—will usually be covered by commercial property insurance, you need a special policy if you want protection from flood damage. The Q&A below will help you understand this type of coverage and determine if your business needs it.

Does my commercial property insurance include flood coverage?

No. Not unless specifically endorsed.  Damage from flooding, including flooding generated by hurricane-generated storm surge, typically is not covered under a standard commercial policy, including a Commercial Package Policy (CPP) or a Business Owners Policy (BOP).

What does flood insurance cover?

Flood insurance covers damage to your building and contents caused by flood. This includes losses resulting from water overflowing rivers or streams, heavy or prolonged rain, storm surge, snow melt, blocked storm drainage systems, broken dams or levees, or other similar causes. To be considered a flood, waters must cover at least two acres or affect two properties. Generally if water comes from above—for instance from rain or melting snow overflowing gutters and leaking onto your inventory—you’ll be covered by your standard commercial property insurance.

What isn’t covered by flood insurance?

Property outside your building generally will not be covered. For instance, landscaping and septic systems will not be covered. In addition, flood insurance will not cover damage to your business vehicles, but this can be included in the optional “comprehensive” portion of your business vehicle insurance. Financial losses caused by business interruption or loss of use of insured property are also not covered.

Do I have to purchase flood insurance?

If your commercial property is located in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, you are required to purchase a flood insurance policy.

How do I determine my risk for flood damage?

Location is the most important factor for weighing your risk for flood damage. Is your business located in or near a flood zone? (Flood map search tools can be found online), In what part of the building is your businesses equipment and inventory located? Anything housed on a lower floor, for instance, will be at greater risk.

Where can I purchase flood insurance?

We can provide you with Flood Coverage.

How long does it take to get flood coverage?

Typically, there’s a 30-day waiting period from date of purchase before your policy goes into effect unless required by a lender.

Does my flood policy cover mold?

Damage from mold and/or mildew resulting from the after-effects of a flood is covered, but each case is evaluated on an individual basis. Mold/mildew conditions that existed prior to a flooding event are not covered, and after a flood, the policyholder is responsible for taking reasonable and appropriate mitigation actions to eliminate mold and mildew.

How much flood coverage can I get?

As much as you need.  A typical NFIP Commercial flood insurance policy provides up to $500,000 of coverage for your building and up to $500,000 for its contents.

What if I need more coverage?

You can purchase what’s called excess insurance coverage to rebuild properties valued above National Flood Insurance Program (NFIP) limits. Excess coverage includes protection against business interruption.

Does My Business Ned Earthquake Insurance?

Though rare in many areas of the country, earthquakes can be highly destructive. Commercial property insurance covers some natural events, such as wind damage, but you must purchase separate coverage if you want protection against earthquakes. The brief Q&A below will help you weigh your risks and determine if you need this type of coverage. In addition, ask your insurance professional if your business should consider adding earthquake insurance.

Do I really need earthquake insurance?

According to the U.S. Geological Survey, our nation has about 20,000 earthquakes a year—mostly small. That said, since 1900, there have been earthquakes in 39 states, with damage in all 50 states. You may especially want to consider earthquake insurance if your business is located near geological fault lines or in a state prone to quake damage, such as California.

What does commercial earthquake insurance cover?

Your business earthquake policy will generally cover damage to your building and to your business property such as your inventory. Depending on the policy, lost business income caused by an earthquake may also be covered. Coverage only begins when damage has exceeded your policy’s deductible—the amount you pay out of pocket before your insurance kicks in. Earthquake insurance policies often have high deductibles—ranging from 2 percent to as high as 20 percent of the value of your building, depending on its location, age and condition.

Are there special requirements for qualifying for earthquake insurance?

Your business property may have to undergo an inspection and upgrades before you can qualify for earthquake insurance. For instance, before your building can be insured against earthquakes, you may have to have the structure bolted to its foundation. You may also be required to brace chimneys and walls, as well as make other improvements.