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. Although the clean-up in her wake has been ongoing, there’s a long road ahead.
Extensive flooding took place up and down the East Coast due to the storm, even in areas that aren’t prone to it. Many homes and businesses suffered damage from floodwaters. Some owners did not have flood insurance. Unfortunately, approximately 40% of small businesses never reopen after a disaster due to flooding.
Flood insurance isn’t for everyone, but it’s important to understand the risks at your business and carefully consider if it’s right for you.
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.
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.
Be clear as to 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.
Building Property
- 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 Contents
- Personal belongings
- Portable air conditioners
- Portable appliances
- Washers and dryers
- Freezers
- Curtains
- Artwork, mink coats, and other valuable possessions
Flood insurance doesn’t cover everything. Exceptions 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 them to you. Instead, 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. Yes, it’s another expense. Carefully consider your risk level. Talk to knowledgeable people. Decide for yourself if it represents a good investment.
Reach out to an agent for additional information.
There are plenty of resources online that provide information about flood insurance, such as FEMA, 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.
Plan ahead!
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. Don’t wait.
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’s important to understand the flood risk at your business and carefully consider if it is right for you. It may just save your business.
John Egan is managing editor of Insurance Quotes, a popular insurance website that provides online services to consumers seeking Auto Insurance knowledge and savings on their car insurance policies.
