Does Business Insurance Cover Flood Damage?

Flood damage can be disruptive

Does Business Insurance Cover Flood Damage?

Flood damage can be disruptive, especially if you’re a small business owner. It’s crucial to have the right insurance cover in place to protect you against flood risks. But what coverage do you need? 

Below, we look at whether business insurance includes flood coverage, and where you can get insurance coverage for your business.   

What Is Business Insurance?

Business insurance protects your company from the risks you face during normal day-to-day operations. This type of coverage can cover the cost of settling lawsuits, paying for repairs, or replacing property.  

There are various types of business insurance policies – here are the most common options.

  • Commercial property insurance: Standard commercial insurance protects the premises you own or rent. It also covers equipment and stock held inside the property. 
  • General liability insurance: General liability coverage covers the cost of lawsuits such as personal injury claims and accidental property damage. 
  • Business owner’s policy: A business owner’s policy is more comprehensive. It includes both commercial property and general liability insurance. 
  • Professional liability insurance: This insurance covers you against claims for errors, omissions, and professional negligence. 

Does business insurance have flood coverage, though? Not necessarily – let’s take a look.  

Does Building Insurance Cover Flood Damage?

The simple answer is this: the average commercial insurance policy does not include flood protection. Commercial property insurance typically only covers damage caused by:

  • fire 
  • lightning  
  • theft 
  • wind  

It won’t cover flooding, such as flooding caused by a storm surge. Meaning, if you want flood coverage, then you normally need a separate flood insurance policy.

A standard commercial insurance policy might protect you against accidents such as leaking pipes and gutters. However, you need to check the details of your policy to know for sure.

What Is Commercial Flood Insurance?

Flood insurance helps you protect your business against flood damage caused by, for example, a storm or other natural disaster. What’s covered includes:

  • excessive rain
  • flash flooding
  • melting snow and ice
  • overflowing rivers
  • storm surges

Flood insurance covers your business property. So, it helps you cover the cost of repairing or replacing stock, furniture, and other business assets. It also protects the building you lease or own.

Insurance agent and business owner signing a business insurance contract

What Is Not Covered By Flood Insurance?

Flood insurance won’t cover every risk. For example, it only covers damage to the inside of your property – not outside. More specifically, commercial flood insurance will not cover: 

  • damage to business vehicles
  • landscaping around your property 
  • septic tank damage 

Flood insurance won’t cover the losses associated with closing your business to repair damage, either. 

Flood Insurance and Business Interruption

Does flood insurance cover business interruption? The short answer is no. 

Flood insurance will protect you against the costs associated with flood damage. However, as noted, it won’t cover the operational costs associated with closing your business to repair flood damage. So, if your business is interrupted, flood insurance will not cover you. 

Instead, you need a separate business interruption insurance policy.

Business Interruption Insurance

Business interruption insurance covers you if there’s a natural disaster and your business is closed for a while. Natural disasters include flooding. 

This type of policy helps you minimize your financial losses while you focus on getting your business open again. However, the policy only covers you if your normal business activities are interrupted. If you can still trade or work as usual, then you’re not covered.

Do I Need Flood Insurance?

Not every business needs flood insurance. However, if you’re in a high-risk area such as a flood zone, you should have flood insurance to protect your business. Some lenders may also require you to take out flood insurance, depending on their policies and your risk level.

Even if you don’t live in a flood zone, it’s still worth considering flood insurance. After all, flooding can affect any property, and downtime can be significant.  

How Much Does Flood Insurance Cost?

It depends on various factors, such as:

  • how close the building is to the water
  • the level of coverage you require
  • whether you’re in a flood zone

Your policy might cost more if you’ve already made flood insurance claims for your business, or if you live in a flood zone. 

Where Do I Get Business or Flood Insurance Quotes?

Cover is available through private insurers or the National Flood Insurance Program (NFIP). Always compare quotes before choosing a policy – the first business flood insurance quote you get is not always the cheapest. 

If you need help obtaining flood insurance, the InsurePro team can help.

Get Small Business Flood Insurance | InsurePro

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