Rain and melting snowpack in parts of the upper Midwest and Great Plains in recent weeks have contributed to record flooding that has damaged homes, prompted evacuations, disrupted businesses, and killed at least three people. And with above-average precipitation in the forecast, almost two-thirds of the Continental US will face elevated flood risk through May, according to the National Oceanic and Atmospheric Administration. Although risk professionals can’t control Mother Nature, they can take steps — including purchasing insurance — to prepare for and manage the effects of flooding on their operations.
Why Flood Insurance Matters
Some risk professionals might think that only those organizations with properties in special flood hazard areas (SFHAs) or with federally backed mortgages need flood insurance. But the reality is that a single flood event can cause significant damage even in areas that have not historically been considered at high risk. For example, when Hurricane Michael struck the Florida panhandle in October 2018, some of its most devastating effects were to Mexico Beach — a community with many areas not designated as SFHAs.
Businesses should weigh the value of purchasing flood coverage via the National Flood Insurance Program (NFIP). A policy purchased via the NFIP can provide coverage for flood damage to buildings and their contents, including losses from the overflowing of bodies of water, storm surge, snow melt, heavy rains, broken dams, and other potential threats. This dedicated coverage can be essential because commercial property insurance policies do not typically cover flood damage.
Beyond purchasing an insurance policy, it’s important for any business under imminent threat of flooding to protect their properties through sandbags, pumps, and other means. A flood policy can help here, too, providing expenses coverage for these protections and incurred expenses coverage for costs related to moving insured property to other locations. Policy deductibles do not apply to this coverage.
Know Your Property
If you qualify for and don’t already have federal flood insurance, it’s important to note that federal flood policies generally require a 30-day waiting period before they become active. So you shouldn’t wait — if you’re interested in purchasing flood coverage, work with a licensed agent or broker to prepare an underwriting submission.
Your submission should include relevant, accurate, and complete data and documentation, which can help underwriters properly price coverage and expedite a claim if you suffer a flood loss. Among other items, you should be prepared to provide underwriters with information about the types of buildings and other properties to be insured, including:
- Property values.
- Ownership.
- Building types.
- Contents types.
- Exact locations.
- Elevation certificates.
- Loss history.
Time is of the essence for reviewing your flood insurance coverage and risk mitigation plans. Flooding resulting from spring showers and snow melt – and the looming hurricane season – could disrupt your business and your employees’ and customers’ lives for days. Now is the time to examine your options and alternatives so you are prepared for floods and can hasten your recovery from them.
