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Does My Business Need Flood Insurance?

4/5/2021 (Permalink)

Flood Insurance Policy on an office desk Are you covered?

Commercial insurance isn’t just about protecting property, it’s also important for peace of mind. Knowing your business is protected allows you to focus on what you do best: growing an enterprise.
In some cases, it’ll be required, particularly if you have a lender or investors. However, most insurance policies don’t cover flood damage. To get coverage in Brooklyn Park, MN, you’ll have to purchase a flood insurance policy.

What Is a Flood Policy?

Flood coverage is designed to pick up where other policies leave off. When a flood strikes your business, it covers most of the indoor damage, including

  • Appliances
  • Electrical and plumbing
  • Structural damage
  • Carpet and cabinetry
  • Foundation repair

Specifically exempted from coverage is outside improvements such as landscaping. Also, if a sewer backup happens and it isn’t caused by a flood, the flood policy won’t cover it. The flood policy is meant to be in addition to a standard commercial insurance policy, not a replacement for it.

What Businesses Require It?
Generally, there are no laws mandating coverage. if your lender or investors want you to have it, that’s when it’s required. Most lenders won’t expect you to have flood coverage unless you’re in a high-risk flood zone. You can also ask your local restoration experts about flood-prone areas.
Any building in a floodplain or the 100-year flood zone is going to be considered high-risk. You can look at FEMA’s flood maps online or consult with local authorities to determine what areas are at risk.

Do You Need It if It’s Not Required?
If you’re in a flood zone, you almost certainly should get a flood policy. Flood insurance is subsidized by the government, and because of the subsidies, most experts say it makes financial sense in flood-prone areas.
If you’re not in a flood zone, it’s a tough call. Most buildings not in a high-risk zone are statistically unlikely to need coverage. However, a flash flood can happen anywhere, so the peace of mind might be worth it.
Ask your lender about their flood insurance requirements and check out your flood maps. A little advanced knowledge can save a fortune in the long run.

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