Answering Business Owners’ Questions About Flood Insurance and the Damage Restoration Process

2/1/2022 (Permalink)

Blog Summary: SERVPRO of Carrollton provides answers to questions business owners frequently ask about insurance coverage for flooding, as well as flood restoration services.

When a natural disaster such as flooding strikes, business owners need immediate flood restoration services to get their company up and running. The team of professionals at SERVPRO of Carrollton answers frequently asked questions that business owners commonly have about flood insurance coverage and flood restoration services.

A natural disaster can devastate a business. Production, sales, and service are interrupted while equipment, raw goods, and inventory can be damaged or destroyed. A massive natural disaster such as a hurricane or the recent freeze of February 2021 immobilizes an entire supply chain. With the economic challenges stemming from the pandemic shutdown, an additional disruption of the revenue cycle may shut the doors of a business.

Margins have never been tighter. Clarity about what a commercial property damage policy covers is crucial for continued business success. Damage resulting from certain types of natural events is usually covered by commercial property insurance. Lightning and wind are two examples. Damage caused by other types of natural events, such as flooding, is not typically covered under a standard policy. A special policy is required if protection from flood damage is desired.

The Q&A below sheds light on commercial property damage coverage. The goal is to assist business owners in determining whether expanded coverage is needed.

Flood Insurance FAQs

Q: Is flood coverage included in a standard commercial property insurance policy?

A: Flood damage caused by a storm surge from a hurricane or tropical storm generally is not covered under a standard commercial property damage policy. Hurricane-generated storm surge damage also is outside the coverage parameters of the Commercial Package Policy (CPP) or a Business Owners Policy (BOP). Coverage for flooding can be procured through the National Flood Insurance Program (NFIP) provided by the Federal government.

Q: What does flood insurance cover?

A: Damage to a structure or structures and their contents caused by the flood is covered by flood insurance. Losses stemming from the following situations are covered by Federal flood insurance:

• Severe or prolonged precipitation
• Overflow from streams or rivers
• Hurricane-generated storm surge
• Snowmelt
• Clogged or blocked storm drainage systems
• Ruptured levees or dams or other similar causes

Certain specifications must be met for the event to qualify as a flood. The floodwaters must cover at least two acres or impact at least two properties. Standard commercial property damage insurance will cover water damage if the water originates from above. A standard commercial property damage policy will generally cover gutter overflow from rain or melting snow that leaks onto inventory and damages it.

Q: What is not covered by flood insurance?

A: Property outside the building generally will not be covered. Damage to company vehicles can be included in the optional “comprehensive” portion of a business’ vehicle insurance. Losses stemming from business interruption are not covered. Loss of use of the insured property is also outside the scope of flood insurance.

Q: Is the purchase of flood insurance mandatory?

A: Purchasing flood insurance is mandatory if:

• the commercial property is in a high-risk flood area
• the business has a mortgage from a federally regulated or insured lender

Q: How does a business owner determine the risk hazard for flood damage?

A: The primary factor in determining a business’ risk of flood damage is location. Flood map search tools will help the business owner or manager identify whether the location is in a flood zone. The location of equipment, machinery, and inventory must be factored into the risk analysis. If the area where the equipment and inventory are located is vulnerable to flood damage, the risk of damage is elevated. Likewise, any items of value stored on the ground floor of a building located in a flood zone are at risk.

Q: Where can flood insurance be procured?

A: Flood insurance coverage from the National Flood Insurance Program (NFIP) can only be obtained through an insurance professional.

Q: How long does it take to get flood coverage?

A: The policy goes into effect at the conclusion of a 30-day waiting period after the date of purchase.

Q: Does a National Flood Insurance Program (NFIP) flood policy cover mold?

A: Yes, but each case is evaluated on its own merits. Pre-flood mold/mildew conditions are excluded from coverage.

Q: How much flood coverage can a business purchase?

A: Commercial flood insurance provides:

• up to $500,000 of coverage for flood-related damages to the building
• up to $500,000 for contents

Q: What if more coverage is needed?

A: A business can purchase excess insurance coverage for the purpose of rebuilding a property valued above NFIP limits. The excess coverage policy includes protection against business interruption.

Q: What is the best way to be prepared for a potential flood or storm damage disaster?

A: SERVPRO of Carrollton advises business owners to consult with a local insurance professional about the business’ insurance needs. If the physical location of the business warrants obtaining flood insurance from NFIP, the insurance professional can take care of the process from start to finish.

A proactive approach to flood restoration services involves pre-qualifying a damage restoration company before a disaster strikes. SERVPRO will work with a business to create a plan of action in case of a flood disaster. This Ready Plan includes information, preparation, training that will put a company in the best position to deal with a flood damage disaster. The crews at SERVPRO of Carrollton stand ready 24/7, 365 days a year, to serve clients when disaster strikes.

For more information about commercial damage restoration, contact SERVPRO of Carrollton by emailing office@SERVPRO10952.com. The team can also be contacted by phone at (972) 446-0383.