Flood Insurance Requirements for Businesses

10/24/2019 (Permalink)

The storm surge of a hurricane, an overflowing river and spring runoff are all flood insurance events

Flood Insurance Requirements for Businesses

The next time you get together with a group of business acquaintances, casually ask for some advice about flood insurance. You may be surprised at how many different answers you get. You will learn that some:

• Have it but don’t understand it;
  
• Have heard of it but don’t have it; or
  
• Have never heard of it.
  
  

Some Floods Require Separate Insurance

Floodwater that comes inside from an outside source requires a separate policy. The storm surge of a hurricane, an overflowing river and spring runoff are all flood insurance events. This policy is different from a commercial insurance policy which would address water damage from a plumbing flood.

You Should Determine If the Business Is in a Flood Zone

Some places are more susceptible to floods than others. If your business is located along a river or near the shore, the business is probably in a flood zone. Even if it isn’t, it’s a good idea to find out for sure from the City Engineering Department.
Federal Lenders Don’t Take Unnecessary Risks
In many cases, businesses encounter problems and file for bankruptcy. Bankruptcy leaves creditors, including the mortgage lenders, with a loss. The risk is greater than average when the business is in a flood zone. Therefore, federally regulated and insured lenders require their business customers to have a separate policy for floods. This policy guarantees reimbursement when a flood occurs.
Other Parties Might Require a Separate Flood Policy
Nobody likes to lose money in a disaster. Depending on the organization of the business, there may be other parties who might require a separate insurance policy. They are:

• Lessors who own equipment leased to the business;
  
• Vendors or customers who own inventory stored on the property; and
  
• Mortgage lenders or other creditors not covered by the federal government requirement.
  
  

Recovery Starts After the Water Recedes

The approval of the flood insurance claim marks the beginning of the recovery. There are flood disaster recovery specialists located in the Ballard, WA, area who are ready to start work. They are a phone call away.