Six Reasons Businesses Need Flood Insurance

Some of your clients could be one bad storm away from closing forever. At least 25% of small businesses never reopen following a disaster. Flooding is the most common disaster, and many businesses don’t understand their risks or potential financial impacts. 

Flood insurance helps close a dangerous gap in coverage. Below are six facts you can share with businesses in your community. Helping them understand the value of flood insurance shows how to protect their businesses and the lives they’ve built.

1. Commercial property insurance doesn’t typically cover flood damage. 
2. Businesses are ineligible for FEMA disaster grants, and disaster assistance loans must be repaid with interest. That means taking on additional debt just as cash flow takes a hit from business disruption.
3.  From 2011 through 2015, the average commercial flood claim was nearly $90,000 and many businesses experience higher losses. 
4. Businesses located outside a high-risk area still face flood risk. In fact, about 40% of flood damage claims come from outside high-risk areas.
5. Businesses that rent space need coverage for property like furnishings, computers, telephones, inventory, stock, tools, equipment, and machinery. Tenants’ property is not covered by the owner’s property insurance policy.
6. NFIP’s commercial property insurance provides coverage of up to $500,000 for buildings, and up to $500,000 for personal property. Policies typically require 30 days from the date of purchase to take effect, so it’s smart to get coverage in advance of seasonal flood risks.

If you need more resources about coverage and exclusions, check out the summary of coverage.