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Does Your Business Need Flood Insurance?

Commercial property insurance will cover damage from many types of natural disasters, such as lightning strikes, windstorms, or wildfires, but, much like with personal home insurance, damage from flooding is not included in a typical policy. You’ll need to purchase a separate flood insurance policy to make sure your business property is covered in the event of a flood.

What is a flood?

Flooding is when water accumulates on land that is usually dry. For the National Flood Insurance Program to designate water accumulation as a flood, it must cover at least two acres or at least two properties, one of which must be yours if you intend to file a claim.

What are common causes of flooding?

Many things can cause a flood, and just because you’re not in a designated flood zone doesn’t mean you can’t experience a flood.

Here in Illinois, we often get flash floods during thunderstorms, particularly in low-lying areas. Rapid snowmelt can also cause flooding, especially if the ground is still frozen or too saturated to absorb the extra water. Rivers and canals can overflow during storms, and storm drains can get clogged and back up.

Am I required to purchase flood insurance?

If your business property is located in a designated flood-prone area, you may be obligated to buy flood insurance, especially if you have a mortgage on that property. Otherwise, you’re not strictly required to purchase flood insurance, but it’s still a good idea. Typical commercial property policies, including package, umbrella, or business owners policies, don’t cover damage from flooding, and flooding doesn’t only happen in designated flood zones.

What a flood insurance policy covers and does not cover

Flood insurance covers property damage from a qualifying flood, including mold resulting from that flooding. However, a standard policy typically does not cover your business’s vehicles, landscaping outside your building, or your sewer or septic system. Flood insurance also doesn’t cover loss of income from your business not being able to operate because of the flooding.

Whether your business is located in a designated flood zone or not, it’s a good idea to look into purchasing commercial flood insurance. Our commercial lines agents can help you get coverage to make sure your business doesn’t end up underwater in the event of this not-uncommon natural disaster.

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