Superstorm Sandy crippled the Northeast when she swept through in late October, leaving behind immense devastation. High winds, power outages, and coastal flooding all added to the destruction, and although the clean-up in her wake has been ongoing, there is a long road ahead.
Extensive flooding was seen up and down the East Coast due to the storm, even in areas that aren’t prone to it. Those whose homes and businesses were damaged by flood waters and who did not have flood insurance will be left paying for the repairs. Unfortunately, approximately 40% of small businesses never reopen after a disaster due to flooding.
Flood insurance is required in areas that are at a higher risk, but this storm caused damaged that defied the expectations of the millions of home and business owners in the region who may have never experienced a surge such as this. The truth is, where it can rain, it can flood. Business owners should consider whether or not flood insurance is needed for their property in anticipation of events such as this. The following are considerations that business owners should take to heart when deciding whether insurance is right for them.
Evaluate the Flood Risks for Your Business
The Federal Emergency Management Agency conducts studies of communities to determine their flood risks. This information then forms the basis for Flood Insurance Rate Maps. Look at the map of your area by visiting this site and searching your state, town, and community. The maps will provide the 100-year and 500-year floodplains, the areas at risk of flooding and the intensity, and the base flood elevation. This will allow you to assess the risk of flood damage for your business.
Understand What is Covered
Flood insurance is intended to protect business owners from damage from flooding, but it is important to remember that it doesn’t cover everything. The following are the components of flood insurance policies – building property and personal contents – and the coverage that they provide.
- The building, foundation, and electrical and plumbing systems
- Detached garages
- HVAC equipment, furnaces, and water heaters
- Refrigerators, stoves, and other built-in appliances
- Permanently installed bookcases and cabinets
- Carpeting installed over unfinished flooring
- Window blinds
- Personal belongings
- Portable air conditioners
- Portable appliances
- Washers and dryers
- Artwork, mink coats, and other valuable possessions
There are a number of things that aren’t covered by flood insurance. They include:
- Damage caused by moisture, mildew, or mold that could have been prevented by the property owner
- Temporary housing for the business
- Expenses incurred due to the business being interrupted
- Currency or valuable documents
- Decks, septic systems, fences, and other property and belongings.
- Most vehicles
Know What Determines the Cost of a Policy
Flood insurance rates don’t vary depending on the agency that sells it to you; rather, they depend upon the amount of coverage that you purchase for your business and the type of coverage (building, personal, or a combination of both). Additionally, rates depend on the age of the building, the type of construction, and the flood zone wherein the building is located. Business owners must pay the flood insurance premium for the entire year, unless the agency allows monthly payments. While it may be another expense, carefully consider your risk level to determine if it is money that will be well spent.
Reach Out to an Agent for Additional Information
There are plenty of resources online that provide information about flood insurance, such as the FEMA and National Flood Insurance Program sites, but consider calling an insurance agent with questions. Insurance professionals can provide valuable information about the various plans and their costs and can save you time if you have a specific question.
If you evaluate the risk for your business and decide to purchase flood insurance, don’t wait until the last minute. Flood insurance requires a 30-day waiting period before it goes into effect, with a few exceptions. Take action now to avoid getting caught flat-footed in the face of a flood.
Many people impacted by Superstorm Sandy had likely never experienced flooding in any capacity. For business owners without flood insurance, the road to recovery will be long and expensive, if they are even able to reopen. Flood insurance isn’t necessary for everyone, but it is important to understand the flood risk at your business and carefully consider if it is right for you. It may just save your business.
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