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Commercial Flood Insurance: Understanding the Risks and Options

Updated: Jun 9, 2021

What risk can shut down a business? While the country is currently concerned with a different kind of shutdown, natural disasters — including flooding — have the potential to shutter a business for good. Businesses that are not prepared to cover the costs of flood damage may face thousands of dollars in repair costs.

Commercial Flood Insurance

Many business owners think they are covered by their business owners policy (BOP) or commercial property insurance. Unfortunately, that is usually not the case. Commercial property insurance may provide coverage for damage caused by a burst pipe; damage caused by flood waters is treated separately.

Flood insurance protects businesses from physical impacts of flooding, with coverage for most items within the primary structure of a business: floors, walls, ceilings, furniture, equipment, fixtures, displays and inventory. In some cases, commercial flood insurance covers the growth of mold or mildew after flood waters recede. For businesses whose risks may exceed the limits of a flood insurance policy, excess coverage is available.

So, who needs commercial flood insurance? In short: every business.

Any business in a high-risk flood zone — which FEMA calls Special Flood Hazard Areas — should have flood insurance. However, there are other reasons to get it. If your business is in an area that receives heavy to moderate rainfall or experiences significant snow melt, flood insurance can help ease the financial impact of flood damage.

It is important to consider that many flood insurance claims (approximately one in four, according to FEMA), stem from properties outside of high-risk flood zones. And while we tend to associate floods with coastal areas and hurricane related storm surges, inland flooding is a problem all over the country, making it crucial to understand your business’s flood exposure.

You can determine your flood zone by consulting your area’s Flood Insurance Rate Map, or FIRM. Although they are often incomplete, FEMA Flood Maps can be a starting point for evaluating your flood risk. A private, non-NFIP flood insurer may be able to help you obtain more complete data and offer a more comprehensive picture of your flood risk.

Your flood zone does not encompass your full potential exposure to flooding. Even if your business is not located on the coast or near a large body of water, it is likely at risk for some form of flooding. Wildfire prone areas may experience flooding due to loss of vegetation. And as recent flooding in Michigan showed us, dam failures can cause flooding, as well. For more information on how natural disasters can affect your business, check out the Insurance Information Institute’s library of resources.

Just like residential flood insurance, commercial flood policies are available through the federal government’s National Flood Insurance Program. However, private flood policies, like those available at, offer significant benefits over government policies including more competitive rates, responsive customer service, a supportive and streamlined claims process and additional coverage options. We also use advanced mapping technology to help get your business more accurate rates. If you’re curious about commercial flood insurance, you can test the waters with a quick and easy quote from — call us to get started: 866-503-5663.

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