You are all set with your business – you’ve got the money and product in line, a customer base starting and all your legal obligations are filled. You also have some commercial insurance to cover yourself.
But wait – what about flood insurance?
It is extremely rare that regular business insurance covers flood damage, and unfortunately, statistics show that 25% of businesses that have had to close after a flood never reopen.
Without a separate flood insurance policy to help in the cost of repair and renovation, many companies just can’t afford to reopen.
Because floods can happen anywhere in the country, not just near the water, it’s important for any business to have flood insurance regardless of location. It is true that the closer businesses are to bodies of water, the higher the chances of flood damage.
For instance, Hurricane Katrina caused billions of dollars of damage to businesses, most of them uninsured. But even businesses far from water can be affected by heavy rains and floods.
The Colorado floods caused huge amounts of damage to businesses and homes. Just a couple of inches of water in a business building can cause devastating damage, resulting in high cost to repair. If a business doesn’t have flood insurance, the onus is on the business owner to pay for the damage.
Though often owners don’t think of the devastation that flooding can cause, floods can lead to not only water damage, but secondary effects such as mold and loss of product, records and other important business materials.
Though flooding isn’t common, if it happens, it can be devastating, causing the loss of your business.
Finding Out the Hard Way
Many businesses find out the hard way the importance of commercial flood insurance after it is too late.
Just like other natural disasters, there is nothing to do to prevent a flood, you can only prepare. If you are near water or your business is in a flood plain, you may want to strongly consider talking to your insurance agent about flood insurance.
Even if you aren’t at high risk for flood damage, you never know what Mother Nature may bring and may want to look into insurance anyway.
Questions to ask while considering flood insurance for your business:
- Does your location make a difference in your policy – for instance, if you are in a flood plain, will your premiums be higher?
- What kind of coverage do you want? Do you need it for the building alone, or your product inside?
- How do you file a claim after damage occurs? What exactly will be covered?
- Also, look around for a good policy with an affordable rate – just like any other business aspect, you want the best coverage for the best rate – don’t be afraid to look around and ask questions.
There is a lot to think about when owning a business, and thinking of your business being ruined by floods probably isn’t one you want to think about, but a smart business owner will.
If flooding could ruin your business, you may want to consider investing in flood insurance.
Hopefully you will never have to make a claim, but wouldn’t it be better to have insurance available to you if you did need it?
About the Author: Heather Legg writes on topics relating to small businesses, social media and education.