Understanding Your Business Insurance Policy: Storms and Floods

2/3/2022 (Permalink)

While a flood is a costly and devastating experience for a business owner, it is not always covered by your general business policy.

Storms And Floods: How To Understand Your Business Insurance Policy

While a flood is a costly and devastating experience for a business owner, it is not always covered under their general commercial policy. It is typically understood that flood insurance is separate from commercial property insurance. However, there is not always an understanding as to the reasons why, especially when a typical policy covers some level of storm damage. How and why is flood damage different?

1. Storms

The flooding that is covered by most policies without an additional rider is overflow from drains caused by excessive rainwater. Additionally, you may experience leaks due to wind-damaged roofs which should also be covered under most commercial policies.

2. Floods

Flood damage caused by actual floods and not storms typically refers to overflowing rivers, creeks, lakes, dams and other water courses. While these floods can occur naturally, they are not considered storm damage, likely because floods do not happen everywhere, making universal coverage difficult and unfair.

3. Storm Floods

Flooding caused by storms is an interesting overlap that likely requires clarification from your insurance provider. While a storm may lead to an overflowing river, it still may not be covered by your policy because of where the problem originates.

While your insurer will provide the most significant insight into potential coverage, a disaster restoration specialist in the Buffalo, MN, area can also give some insight into preventative measures. Additionally, these companies can help you develop an emergency action plan to protect and restore your business after a disaster.

Flood damage is a tricky topic when talking about insurance coverage. The most common misconception is that insurance companies don’t offer universal coverage because of greed, but the reality is that not enough consumers live in flood zones to make premiums fair. Storms are experienced by every business and person, making general coverage acceptable, but floods will likely always require special coverage and riders.