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Commercial Flood Coverage & New Options

By August 14, 2018March 29th, 2021Liability, Property

If you live in or around Houston, you’re well aware of the devastation flood damage can cause.  This article will cover some basics on flood insurance and also make you aware of a flood insurance option you may not be familiar with.

Why Buy Flood Insurance?

  • Simply put, if a flood occurs (i.e. rising water), the damages will likely not be covered under your property policy. To obtain coverage for a flood you may need to purchase a separate flood insurance policy.  (Note:  A few carriers may offer cover within their policy, but often at a higher deductible or limited coverage – but it’s safe to say that the majority do not cover losses due to flood – check your coverage carefully).
  • No property is completely safe from potential flooding.  Even property that has never flooded is often susceptible due to increased construction or other unforeseen reasons.  More than 20 percent of flood claims come from properties outside “high risk” flood zones.
  • Just one inch of water can potentially cost more than $25,000 in damage.  Per the national flood insurance data, the average flood claim is nearly $30,000.

Flood Insurance Options:

  • National Flood Insurance Program (NFIP) – The NFIP program is written through various insurance companies who have chosen to administer that program.  The pricing is the same among all carriers and if you’re in a low-risk flood zone, they have a special “Preferred Risk” flood program.  The minimum coverage for commercial properties under that program is $50,000 on the building and $50,000 on contents with the current annual premium $929.  Higher limits are of course available.
  • Commercial Primary Flood – This relatively new program offered by limited insurance carriers can be an attractive alternative to NFIP flood coverage for those with multiple NFIP flood policies or those looking for more enhanced coverages.  If your building is located in an A or V flood zone (more “high risk”), you may find the premiums in this program a little lower.  If you are in an “X” flood zone (lower risk), the premiums will likely be higher.  Because of it’s newness, it’s hard to offer an accurate cost comparison across the board but we’re happy to make those comparisons for you.

Key Benefits Of The Commercial Primary Flood Coverage Over the NFIP Program:

  • One master policy instead of multiple individual NFIP policies.
  • One renewal date for all buildings.
  • Replacement Cost Value (RCV) coverage instead of Actual Cash Value (ACV) coverage.
  • Option to include business interruption coverage is pending approval but should be available soon.  Until then a $10,000 Flex Cash can be added to each building.  Any type of business interruption coverage is unavailable through the NFIP.
  • Availability to choose a deductible option that matches your risk tolerance.
  • Add and delete locations/buildings with ease in the same manner you add and delete your master property policy.
  • Coverage for property outside buildings (fences, signs, car ports, parking lots, walkways).
  • No limitations on coverage below BFE / in basements.

Regardless of which program fits your needs best, as unfortunately many people discovered during Hurricane Harvey, not having Flood Insurance can be catastrophic so if you’d like more information or a quote, please don’t hesitate to contact us.