After almost every major flood event, business owners and/or condominium owners who have suffered flood damage, file their claim with their NFIP Flood Insurance Company (Allstate, Farmers, FEMA, etc.), and are told by either the flood insurance company or adjuster that the flood insurance policy does not cover all of the buildings or structures on the property. Owners are usually frustrated at that point because they were under the impression that all buildings on the property were covered.
Commercial property owners and condominium property owners can receive flood insurance through the NFIP or one of its Write-Your-Own (“WYO”) Insurance Companies (Allstate, Hartford, American Bankers, Farmers, etc.). Unfortunately, NFIP Flood insurance policies have very strict limitations and constraints, and it may be necessary or preferable for some commercial property owners to purchase additional or supplemental flood insurance coverage through a private flood insurance company or purchase the entire flood insurance coverage through a private flood insurance company.
To be sure that your business or commercial property is properly covered with the required flood insurance, here are a few important tips to keep in mind when obtaining coverage on a NFIP Flood Policy:
One Building Covered Per Policy
This means that if there are multiple buildings or structures on the commercial property that need flood insurance coverage, a separate policy must be put in place for each building structure. Each building structure must have its own flood insurance policy for it to be covered.
Policy Coverage Up to $500,000 per Building Structure
The NFIP allows for up to $500,000.00 in flood insurance coverage for each individually insured building structure, and up to $500,000.00 in coverage for personal property or business contents within the covered building structure.
If you believe that your commercial property building(s) need more than $500,000.00/building in flood coverage, seek additional flood insurance coverage through a private or excess flood insurance policy.
No Coverage for Business Interruption
NFIP flood insurance policies do not cover business interruption, lost business profits, etc. If you need/want flood insurance coverage for those damages, contact your insurance agent or broker to help you obtain coverage for those items as related to flood damage.
NFIP is Not the Only Option for Flood Insurance
Typically, NFIP flood insurance is not the only option, and it is rarely the best option for commercial property. NFIP flood policies provide extremely limited coverage. They do not cover anything outside the four walls of the building, and they are ‘direct-loss’ policies meaning they will only cover damages directly touched by flood waters.
As always, it’s important to know your options and to verify that the flood insurance coverage you need is in fact put in place. We recommend that you contact a knowledgeable insurance professional to assist you in these matters.