“Everything’s bigger in Texas,” and that certainly applies to flooding. Texas has some of the largest storms in the world, and flooding occurs regularly, with severe and destructive floods occurring somewhere in the state every year.
The damage from flooding can be extensive and financially draining to clean up and recover from. Nearly 40 percent of small businesses never recover from a disaster. If you run a business in Texas – especially if you’re in a flood-prone area – flood preparation should be an essential component of your disaster preparedness plan. And adequate flood insurance needs to be a crucial part of that plan.
Where do you get flood insurance?
Since flood damage is rarely covered under a commercial property policy, you’ll likely have to buy separate coverage. Through the federal government’s National Flood Insurance Program (NFIP), you can get up to $500,000 coverage for your buildings and $500,000 coverage for the contents, along with coverage for prevention, protection, cleanup and the increased cost of compliance.
NFIP coverage is usually the cheapest, but it’s a one-size-fits-all solution that comes with a few caveats:
- One building per policy. NFIP policies only cover one building/structure on the property. If you have multiple structures needing flood coverage, you’ll need a separate policy for each one.
- NFIP policies are “direct-loss,” meaning they only cover damages directly touched by flood waters.
- There is a 30-day waiting period before the policy goes into effect.
- No coverage for extras such as business interruption, property outside your building or business vehicles.
Is NFIP coverage your only option? Many commercial property owners make the mistake of thinking it is – and pay the price later.
What if the NFIP’s one-size-fits-all solution doesn’t fit your business? Luckily, that’s not your only option. In fact, for commercial property owners, it’s probably not even the best option.
If you need higher limits of coverage than an NFIP policy can provide, you can always purchase excess flood insurance coverage through a private insurer in addition to your NFIP policy.
Or, you can get all of your flood insurance through a private insurer. The private flood insurance market has exploded in the past 20 years, and private insurers are using some of the most advanced technology available to asses flood risks and rate properties’ real flood insurance costs.
That’s great news for business owners, and there are other advantages to getting your flood insurance through a private carrier:
- Better and broader coverage
- Greater flexibility, such as the ability to finance the premium
- Shorter, if any, waiting periods
- Coverage for extras such as business interruption
How do you choose the best option? Before you buy, carefully assess your needs:
- Is your property located in a high-risk area (A & V flood zones)?
- How many structures do you need to protect?
- What is the total value of the buildings and contents you need to insure?
- Are NFIP limits adequate to cover you?
There’s one sure way to make the right choice – talk to an experienced insurance professional about your business and your options. At Higginbotham, we don’t just know insurance – we know Texas, and we know floods. Contact us today to learn more.