Commercial Flood Insurance Vs. Personal Flood Insurance

If you own a business, you know that there are certain risks your organization will face, especially in the beginning. One major threat that many companies face is the devastation caused by natural disasters. Floods, in particular, can significantly damage a business’s physical building and its contents. Additionally, some organizations have a higher risk of flooding than others due to their location. Fortunately, there is one effective way for companies to protect themselves from this type of disaster: commercial flood insurance.

Protection From Floods

Commercial flood insurance is designed to shield businesses from losses resulting from damages caused by floods. This type of coverage is normally provided separately from traditional commercial property insurance policies. Commercial flood insurance can help you avoid paying large sums to repair or replace your damaged property.

How Does This Insurance Provide Protection?

This type of insurance offers protection by covering the cost of fixing damages caused by floods. The National Flood Insurance Program (NFIP), which is overseen by the federal government, provides companies with flood insurance. The NFIP defines a “flood” as “A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property).” A flood may be caused by an overflow of tidal waters, an unusually rapid accumulation of surface waters from any source, mudflow, or the collapse of land along the shore of a lake or another body of water.

The Types Of Policies

There are two primary types of flood insurance policies: commercial and personal. Although they are similar, there are notable differences between the two. Therefore, it’s important to be able to distinguish these two types of policies. Here is a close look at each one.

Personal Flood Insurance

As its name suggests, personal flood insurance provides homeowners with coverage for flood-related damages. Families and individuals can substantially benefit from this type of coverage because most homeowners’ insurance policies do not include flood coverage. Personal flood insurance policies typically include both building and contents coverage. The latter coverage area helps protect items such as furniture, clothing, appliances, and electronics.

Commercial Flood Insurance

Commercial flood insurance is exclusively available via the NFIP, which is run by the Federal Emergency Management Agency (FEMA). For commercial properties, this program offers up to $500,000 in both building and contents coverage. For residential properties, the limits for building and contents coverage are $250,000 and $100,000, respectively. These coverages are purchased separately and the deductibles for each are different. Similarly to personal flood insurance, contents coverage can help pay for damage to furniture and appliances. Nevertheless, damages to other items such as HVAC systems, fixtures, (e.g. ceiling fans) and plumbing and electrical systems are also typically paid by contents coverage.

There is also generally a 30-day waiting period from the date you buy your flood insurance policy until it goes into effect. However, there are certain exceptions to this.