In 2012, Hurricane Sandy caused $70.2 billion in economic damage to New Jersey. Thousands of businesses were closed for renovations, and hundreds never reopened.

Most of these businesses weren’t prepared for a storm of this severity. Many of them didn’t have commercial flood insurance to help recoup their losses. With no money to rebuild, they were forced to shut down.

Don’t let that be you. Floods can happen anywhere but are more common in coastal states like New Jersey.

If your business doesn’t have flood insurance, now is the time to get it. Continue reading to find out what flood insurance is, what it covers, and why it matters.

What is a Flood?

A flood is what happens when water accumulates where it isn’t supposed to be. This can be from rising tides or overflowing river banks. It can also occur when drain systems get clogged and a lot of rainfalls.

What is Commercial Flood Insurance?

Commercial flood insurance protects businesses against flood damage. It can help cover the costs of building damage or loss of company assets if a flood occurs.

How important is it to have? It could be the difference between permanently closing your doors or rebuilding. It is an invaluable protection for your company, especially if you’re in a high-risk flood zone.

Types of Commercial Flood Insurance

There are three types of commercial flood insurance available. The first two are the most commonly used. The third option is an add-on for businesses at a high-risk of flooding or with more than $500,000 in assets.

Standard Policy

The standard policy is for businesses in high flood risk areas. It is also for companies in undetermined risk areas.

With a standard policy, businesses must insure their building and it’s contents under two separate policies. Each of the two policies can be for up to $500,000. Deductible options range up to $50,000 per policy.

Preferred Risk Policy

If your business is lucky enough to be in a low-to-moderate flood risk area, it qualifies for a preferred risk policy. These policies have the lowest premiums. It also allows for the building and contents to be insured on the same policy.

Supplemental Policy

Supplemental policies are an extra coverage option for anyone with commercial flood insurance. Most companies don’t need it.

Your company might need it if they’re in a high-risk flood area. Companies whose building and contents are worth substantially more than $500,000 could also use a supplemental policy.

Does Regular Commercial Insurance Cover Flooding?

No. This is a common misconception that costs New Jersey business owner’s fortunes. Regular commercial insurance policies don’t cover flooding.

These policies might cover certain water-related damages, however. Usually, you’re covered from any water damage that comes from above but not from below.

This means you’d be covered if snow caused your roof to cave in. You wouldn’t be covered if a storm surge caused waters to enter your first floor.

How Much Does Commercial Flood Insurance Cost?

The price of commercial flood insurance varies based on certain factors. Your building’s age, height, and condition are large factors. The value of assets insured may also affect cost.

The greater the risk of flooding, the higher the insurance premium. Someone in a moderate risk area will pay less than someone in a high-risk area.

The company itself will be a factor. Different companies may have different rates. They might place a higher emphasis on one consideration over another, which can affect the price.

Whether you buy flood insurance through FEMA’s National Flood Insurance Program (NIFIP) or a private insurer is another consideration.

How to Choose a Commercial Flood Insurance Policy

When purchasing flood insurance, there are two ways to go about it. You can buy the insurance directly through FEMA’s program, or you can go through a private insurer.

If you’re looking to buy commercial flood insurance for your business, you want to know how to choose the right policy. Look at the key considerations below to get a better understanding of how to choose the right policy.

• What flood zone is your company in?
• What is the value of your assets?
• Which companies serve your location?
• Do you need a company that offers supplemental coverage?
• Which companies offer the best rates for the coverage you need?
• Do you prefer to work with an insurance agent in person or are you fine with doing business over the phone?
• Is it possible to work with the same private insurer holding your other insurance policies?

You’ll also want to look at online reviews when finding an insurance provider. If you’ve never worked with a company before, seeing how other customers were treated is the next best thing.

You can search online to find real customer testimonials and reviews. If you find nothing during your online search, you should be wary. Little to no online presence is a huge red flag for scams.

Things To Know About Flood Insurance

Most businesses should have flood insurance. Even in low-to-moderate flood risk areas, this insurance policy can help protect the future of your business. There are a few things you need to know about these policies, however.

• You must have flood insurance for thirty days before you can receive coverage
• Flood insurance doesn’t cover earth-related disasters (even if there is flooding involved)
• Policies cover items based on the actual value, including depreciation
• Flood insurance doesn’t cover any damage sustained before the flood

For More Information

Still have questions about commercial flood insurance? Looking to start a flood policy for your business? Contact us today and one of our associates will be happy to assist you.