What is covered by a flood policy?

Download a summary of commercial flood coverage. This document was prepared by FEMA to help you understand your flood insurance policy through the National Flood Insurance Program (NFIP). It provides general information about deductibles, what is and is not covered by flood insurance, and how items are valued at time of loss.

Flood Insurance Quick Facts:

  • Covered losses are based on actual cash value
  • Contents in a basement have very limited coverage
  • Business interruption and loss of income are not covered

Example of a prior flood loss: Dr. A has five practice buildings located in low to moderate flood zones. Because the buildings were outside of high-risk areas, Dr. A did not secure flood insurance. One of the buildings experienced a flash flood, and the practice flooded with four feet of water. Damage estimates for the contents and building are nearly $100,000, which will be out-of-pocket expenses for Dr. A. Furthermore, because the flash flood occurred in a small area, the governor did not request federal disaster assistance so there were no low interest federal loans available. After this loss, Dr. A secured a flood insurance quotation; the average premium per location for building and contents coverage (with limits ranging from $50,000 to $450,000) was $1,280 annually.

“I Have Insurance for Flood Damage” and Other Flood Myths

Imagine that your practice sustained flood damage… One of your first tasks is to find a debris removal service… Then you need to replace your biologicals, your medical equipment, your flooring… Thousands and thousands of dollars in expenses… Without a flood insurance policy, all of your expenses are going to be out-of-pocket. Make sure you review your need for flood coverage. Consider these five myths about flood insurance. Challenge your preconceptions—protect your practice.

Myth : I’m already covered because I have property insurance.
FACT: Only flood policies cover flood damage—all business property policies specifically EXCLUDE flood damage. This is a standard industry exclusion.

Myth: I don’t live in a flood plain, so I don’t need a policy.
FACT: Anyone can be financially vulnerable to floods. People outside of high-risk areas file more than 20% of NFIP claims and receive one-third of disaster assistance for flooding.

Myth: A flood would only be a minor set-back.
FACT: 40% of all small businesses that experience a flood fail to reopen. A closed practice means lost revenue, and a flooded practice could mean tens of thousands of dollars in debt.

Myth: If there’s a really bad disaster, federal assistance will pay for the damages.
FACT: Federal disaster assistance typically comes in the form of a low interest loan to help cover flood damage, not compensation for your losses. And, the president must formally declare the event a disaster. Flood insurance pays even if a disaster is not declared.

Source: www.floodsmart.gov


QUESTIONS? Need a Quote?

Contact the PLIT at 800-228-7548, option 4 to speak with one of our insurance specialists who will answer your questions and help you secure coverage for losses due to flood. Please note: there is a 30-day waiting period on new flood policies.