Flood Insurance For Farms and How Have We Learned From Flooding in Nebraska?

​Farms can be one of the most expensive businesses to run and when damaged it can cause nationwide damage. So much of the United States depends on farming as a source of food and a source of income. So when floods occur you can imagine what can be at risk.
 
The recent flooding of the Midwest in March 2019 has shown us the type of damage that can be done to farms from flooding. Many of these farm areas took on a lot more snow than they did in years past. As a result when spring storms approached in March of 2019 it decreased the snow melt time table dramatically. Generally when areas like Iowa, Nebraska, Idaho, Wisconsin, North Dakota, and Minnesota start to thaw out from the winter the snow will generally melt over a period of 45 to 60 days. However when the spring storms moved in to these areas in 2019 it dropped these snow melt period down to matter of days.
 
This increase in water flow caused areas like the Missouri and Mississippi rivers to swell very quickly filling local tributaries causing massive flooding to farms across the Midwest that depend on these local water supplies. In many floods this water would recede fairly quickly however these farms and structures were submerged in water not just for a few days but up to 3 weeks in many areas.
 
The amount of time that these areas were submerged destroyed current crops and the opportunity for planting season in 2019 causing a massive blow to the farming industry in the united states. Another area that took massive blow were all these structures on the farms, the loss of live stock, and possibly a livelihood.
 
So what could have been done to prevent this? While there is not much that could have been done to save the farming land and crops since they depend on the water supply to survive. However when it comes to the structures and livestock a lot of things could have been done. Unfortunately due to lack of flood education and awareness across the country these farm owners were not aware of certain coverages that were available. So lets talk a little bit about some of these coverages.
 
First of all lets talk about the National Flood Insurance Program also known as NFIP. The NFIP was originally set up in 1968 to help people along the Mississippi River who continued to be devastated by flooding. While this program was set up to help people it was not necessary set up to make people whole again, especially when it comes to farms. You see farms usually have multiple structures on the property and these structures can easily exceed the value of home on the property.
 
Something else that can add up quickly is farming equipment. Sometimes this can exceed tens of thousands of dollars. As you can see when a flood occurs a farm owner can be exposed very quickly, so what can they do to protect themselves. When it comes to a NFIP policy coverages can be pretty limited when it comes to buildings and equipment. Let’s say that a farm policy is written as commercial flood policy. This means that the building coverage cannot exceed $500,000 and when it comes to separate structures a NFIP policy will require separate policies for each structure. Something else that NFIP will do is charge an additional $250 surcharge to each one of these structures. As you can imagine these fees can add up very quickly making finding a cost effective policy very challenging. When reviewing this NFIP policy something else to consider is the lack of  business interruption coverage. As you can imagine when a farm floods it can cause major interruption in day to day business for a very long time. So then if more than one structure are not covered, more than $500,000 in building coverage is not covered, and business interruption is not covered then why would one take out a policy.
 
Well like the average American most people are not aware of other options and if any part of a farm is financed their bank may not inform them of these other options. So what are the other options out there? Outside of the NFIP you have one other option for flood insurance and that is the private market.
 
What is private market flood insurance? This is flood insurance that is provided by private insurance carriers. So how is it different?
 
Private flood insurance can pick and choose the risks that they want. The NFIP has to provide coverage for almost every risk out there. As a result cost effectiveness and proper coverage can be challenging. When it comes to farms this can be crucial as private carriers can put all the structures of one farm on one policy. This can do a few things first of all if a claim occurs it would be one claim not necessarily five separate claims because separate policies are required. Something else it can do is make things more cost effective because the $250 surcharge is not charged on private flood insurance policies.
 
Two other things that come into play is that the policy is not limited to $500,000 in coverage and business interruption coverage maybe available. As the 2019 flooding in Des Moines Iowa and Nebraska City Nebraska showed us $500,000 in building coverage does not go very far business interruption coverage can be crucial for a farm to survive. So what exactly is business interruption coverage? This is the loss of income a business may incur as a result of a disaster. For example if a farm cannot operate then the income it would have generated could be covered for a certain amount of time.
 
 
Now that we have discussed the NFIP and private market you might be trying to figure out what options is best for your farm. Well we recommend reaching out to a commercial farm insurance agent or flood expert like the Flood Insurance Guru that can make sure you have the right coverages in place so your farm can survive after a flood. Also if you have questions about farm flood insurance in Nebraska, Iowa, Minnesota, Wisconsin, Idaho, or other states simply fill the form out below.


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Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com