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.

You can also check out our daily flood education videos on our YouTube channel or even tune into our podcast.

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.

Contact Us

 

For a long time commercial property owners in Alabama have felt they only had one option for flood insurance. However over the last 15 years private flood insurance companies have made a major push.

 

For the longest time private flood insurance companies could not figure out a profitable that also gave them predictable models. As technology has developed these changes have started to push the private flood insurance industry in Alabama forward.

So is the National Flood Insurance Program still the best option for your Alabama commercial property?

Let's look at some changes coming to the National Flood insurance program. The first is rate increases up to 25% on non primary residence properties.

 

This could have a major impact on investors and investment properties.

It could also impact people like apartment building owners.

 

Some other changes scheduled to happen is NFIP Risk Rating 2.0.

 

Everyone is not sure about the overall total impact of this new program. However the closer you are to water it could have a major impact on your bottom line.

So with these changes coming it could significantly the pockets of investors. Before deciding if its still the best option we need to look at some coverages the National Flood Insurance Program does not offer.

As a Huntsville business owner one of the biggest exposures to you could be loss of income. What if you have a restaurant along the Tennessee River and it floods.

 

How would the restaurant stay open when it recovers from this disaster?

This is where loss of income can come into play. This can be a great benefit of private flood insurance in Alabama. The National Flood Insurance Program does not offer loss of income on its flood policies.

As the National Flood Insurance Program continues to increase prices it also has property owners in areas like Montgomery and Birmingham Alabama searching for a cheaper commercial flood insurance option.

So is commercial flood insurance cheaper in Alabama?

It depends on a lot of factors like the flood score, loss history, and location.

Its not unusual to get a commercial flood policy in areas like Huntsville or Birmingham Alabama that is 30-40% less.

 

However in areas of east Alabama like Gadsden, Oxford, and Anniston where losses have occurred in the past rates could be higher or they may not do a policy on the property at all.

It's important to understand what commercial flood insurance options are available in Alabama and when you can make the switch to private flood insurance.

If you want to learn more about this then click here and we can reach out to you.

You can also check out our YouTube channel where we do daily flood education videos or our podcast.

Remember we have an educational background in flood mitigation which means we are here to help you understand your flood insurance, flood risk, and mitigating your property long term.

 

Flood Insurance can be confusing especially has often as the rules change. Your rate might go from $500 a year to $2500 a year with not much explanation.

Today we hope to eliminate some of that confusion for you.

Before we get into that I want to tell you a story about a property owner in Marion Illinois.

This property owner had 4 investment properties that were all in the preferred flood zone also known as flood zone x.

The premium on the first 3 properties was $790 for each property and the 4th property was $2690 a year.

Holy cow that is a difference

So why such a big difference in premium?

In order to understand the difference in premium we must understand what the National Flood Insurance Program defines residential and non residential properties as being.

According to FEMA in order for a property to be considered residential 75% of the building must be used for residential purposes.

So what about those properties that are not?

Well different rating models could come into play which would explain the difference for the property owner we discussed.

If you are an investor or commercial property owner its important to understand these things. They could have a major impact on your profitability.

So is there any way around these higher premiums?

Well there are many options in the private flood insurance market that look at these risks differently.

They may not charge you differently if it is being used for residential or non residential purposes.

So when purchasing a property you want to look at how this property is used now and how it will be used in the future.

Flood insurance options

So if you have further questions on how to understand residential and non residential flood insurance make sure to visit our website.

You can also checkout our YouTube channel where we do our daily flood education videos or our podcast. You can also find this episode below.

 

Remember we have an educational background in flood mitigation. So we are here to help you understand your flood risks, flood insurance, and mitigating your property long term.