Preparing for Catastrophe: What Business Owners Should Know About Flood Insurance
With spring in full swing, it’s time business owners shift their focus from risks associated with winter storms to those associated with hurricanes, tornadoes, and flooding. While hurricanes and tornadoes are more likely to grab news headlines, catastrophe insurance for floods should not be overlooked. In fact, a 2015 study from The Hartford puts water and freezing damage at number two (2) on a listing of the most common property and liability claims for small businesses.
Sometimes the largest exposures to loss are the ones that occur infrequently and yet have the ability to inflict damage across wide geographic areas, such as floods. As climatologists predict greater hurricane and flood risk in the future, it’s essential that business properties be covered for such events. Not only do floods have the ability to severely damage the physical structures of businesses, but they can also ruin inventory and cause businesses to temporarily shut down for repairs.
Because many commercial property packages typically do not cover or restrict coverage for flood or surface water damage, flood insurance is critical for businesses located near a river, ocean, or bay, or in areas where major storms are common. Even if main operations are located in a relatively quiet area of the country, satellite operations, like warehouses and branch locations, may face the real possibility of being impacted by this type of devastating event.
In addition to investing in flood coverage, it’s wise for business owners to understand the principal types of flood risks and how they may affect property. As explained by Selective Insurance, flooding may be caused by levee or dam breaches, extensive rain fall (due to lingering thunderstorms or tropical storms), rising water from melting snow or drifts of ice, or fast-moving water from overflowing rivers. Flood preparation also includes understanding the details and effects of floods’ expected durations, depths, and speeds. For example, Selective Insurance cites a fact from the Insurance Institute for Business and Home Safety: “Any floodwaters that go beyond three feet can crack masonry and other foundational materials, potentially bringing an entire structure down.”
Rose & Kiernan can assist with a review of potential flood exposures at each of your business locations. We maintain strong relationships with carriers that have the ability to respond to these catastrophic exposures, and can help determine if a flood policy is a smart choice or necessary investment for your business. Coverage for flooding is widely available through the National Flood Insurance Program (NFIP) and through private insurers for amounts in excess of the NFIP’s maximum $500,000 Building and Contents limit.