Today we are taking a look at commercial flood insurance in Pelham Alabama. Flooding is the most expensive natural disaster in the United States every year. Pelham area is an area that has experienced major growth over the last twenty years. It is also an area that had some major flood problems in the 80's and 90's.
So today we are going to take a look at what to do when it comes to purchasing a commercial property in Pelham Alabama. Whether you are purchasing a true commercial building or an investment property it's important to understanding how to protect it when it comes to flooding and flood insurance. It is also important o know flooding is the leading natural disaster in the United States.
What Does Commercial Flood Insurance Cover?
- Commercial building
- Business Property
- Loss of income (not by NFIP)
Commercial flood insurance also sometimes called business flood insurance can be tricky so its important to understand how things like flood claims and flood damage can impact flood insurance rates in Pelham Alabama. It is important to remember generally commercial property insurance will not cover flooding.
It's also important to understand how flood insurance coverages are different for a commercial properties.
So first of all is flood insurance required on properties in Pelham Alabama?
- It depends on a few things like if you have a mortgage on the Pelham Alabama commercial property. If you have a mortgage and it is in the special flood hazard area then flood insurance normally will be required.
In Pelham Alabama the special flood hazard area is also going to be known as the 100 year flood zone. This will include flood zones like flood zone A and Flood zone AE.
The video below explains what the difference is here.
So you have found the right commercial property to buy?
What is next?
You want to make sure you have a copy of the flood loss history.
Due to privacy laws FEMA will only provide this to the property owner and it could take up to 30 days to get.
Once you have this you can better understand the flood risk on the property and the potential for flood damage in the future.
So now that you have that you have the flood history on the property you want to understand what flood insurance options are available.
Flood Insurance Options
There are two options available for flood insurance on commercial properties in Pelham Alabama.
Let's look at the National Flood Insurance Program first. This is also called the government flood insurance program or FEMA flood insurance. If entered correctly flood insurance rates should be the same no matter where you purchase the flood insurance from.
National Flood Insurance Program Coverages
The following flood insurance coverage is available through the NFIP
- Building coverage $500,000
- Business property $500,000
It is important to understand that if your commercial property is a single family dwelling then it could fall under the the residential program with the National Flood Insurance Program. This means the following coverages could apply.
- Building coverage $250,000
- Contents coverage $100,000
Private Flood Insurance
The following flood coverages could apply to a commercial private flood insurance policy
- Building coverage (not limited to $250,000 or $500,000)
- Business property coverage ( not limited to $500,000)
- Loss of use or loss of income (Business interruption coverage)
Understanding the difference in these two flood insurance options is very important. One reason is when you go to sell the property it could be a big difference.
For example many times policy assumptions are only available through NFIP.
What is a policy assumption?
This can be very important if you decide to sell the property to someone who is doing an FHA loan on the property.
At the time this article is being written FHA does not allow private flood insurance.
Pricing and Mitigation
So is there a difference in pricing between NFIP and private flood insurance companies?
Yes we have seen where private flood insurance could be up to 60% less in many situations.
Currently private flood insurance companies use different technology to determine a flood risk score. Then this score is used to determine rates.
What about mitigation can it help with pricing?
Yes having things like flood vents on certain properties can help reduce the rates through NFIP. Some private flood insurance companies can use this in the rate for a flood insurance policy as well.
It is important to understand how these flood insurance coverages work when purchasing a property in Pelham Alabama.
So if you have more questions about commercial flood insurance policies in Pelham Alabama then click here.
Remember we have an educational background in flood mitigation so we can help you understand flood insurance, flood risks, and mitigating your property long term.