Do I Really Need Flood Insurance?
Many business owners ask this reasonable question, especially as media reports have increased about the changes in the National Flood Insurance Program and its rates mandated by the Flood Insurance Reform Act of 2012, also known as the Biggert-Waters Act. In answer, consider the following facts from the National Flood Insurance Program (NFIP):
- At least 25% of businesses closing after events such as flooding never reopen.
- Between 2008 and 2012, the average commercial flood claim exceeded $75,000.
- In high-risk areas, there is a 25% chance of flooding during a 30-year period.
- More than 20% of all flood claims arise in areas of low-to-moderate risk.
- Those same low-to-moderate risk areas receive one-third of all flooding disaster assistance.
- Standard commercial property policies do not include flood coverage; it must be purchased separately.
Considering the risks and potential damage, obtaining flood insurance may be one of your best protection decisions. Businesses located in high-risk flood areas with a mortgage from a federally regulated or insured lender may be required to purchase a policy. But even those located in low-to-moderate risk areas may find flood insurance an excellent option, given the claims experience noted above. Also, a business located in a low-to-moderate risk area may qualify for a preferred risk policy, where both building and contents coverage is included for a single low price.
No matter where your property is located, having a discussion about your business and flood insurance with your insurance agent is time well spent. Schedule such a flood review today.
©2013 Selective Ins. Group, Inc. (Branchville, NJ). "Selective" insurers include Selective Ins. Co. of America, Selective Ins. Co. of New England, Selective Ins. Co. of N.Y., Selective Ins. Co. of South Carolina, Selective Ins. Co. of the Southeast, Selective Way Ins. Co., Selective Cas. Ins. Co, Selective Fire and Cas. Ins. Co and Selective Auto Ins. Co. of N.J. Insurers and products available vary by jurisdiction.