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A riverfront or beach side rental property seems to be a great idea, but watch out, this can be a big trouble when it comes to your commercial insurance. Let's dive into that.
Today, we'll be covering about flood insurance coverages for your commercial insurance policy.
"Hold up. Wait a minute. I can get flood insurance on a commercial building?!" Well, two things. Yes, you can. Yes, you should be careful about it too.
It's very common to have flood insurance over these kind of buildings or properties for different businesses. It helps you prepare for all types of risks that flood water can cause you. However, business owners sometimes pick the wrong coverages for their properties, and causes issues-galore when a flood hits.
It's important to know this as soon as you get your property settle because if you're planning to get flood insurance policy from the National Flood Insurance Program (NFIP), then you will have to give them the 30-day waiting period before they give you the go-ahead and approval of your flood insurance. Although we highly recommend to consider private flood insurance as well since this gets you more coverage and are more convenient when discussing coverages.
"What should I do then, Chris?" Well, I'm glad you ask. Let me help you out with that.
Replacement Costs
It's important that you'll make sure that your flood insurance covers the property's replacement costs. Replacement costs are given with a flood insurance to make sure that your contents, the items within the property, and the property itself get replaced or refurbished. Don't ever settle for partial replacement cost, instead make sure that you get the full replacement cost for the building, so in the event that flood water damages your building, you won't be left facing financial loss for months on end.
Business Property
A lot of things that we get here at Flood Insurance Guru are business owners saying "I don't need to get business coverage for my property since my commercial policy's got that covered". Well, you do have that in your policy, but generally it won't be covered if it's damaged by flood water or flood-related incident or disaster.
It's very important to remember that your commercial or homeowners insurance policy doesn't cover flood insurance. It's a great security to get coverage for your business property since this will save your source of income and help you mitigate your business long term.
Loss of Business Income
This is also known as "Business Loss of Use". Let me paint you a picture. You have a business property — say an apartment — that's in a high risk flood zone or special flood hazard area according to the flood map. Say, it got hit by a devastating flood and flood damage had you fixing the property for six months to a year to get it up and going again. If you have coverage for the repair then that's one less problem for you, but if you don't have loss of income for this business, then you're going to lose all of the income within that period.
This simply means that you're going to lose 6 to 12 months of income and no one will replace it for you if you don't have business loss of use in your flood insurance. If it's a 30 unit apartment with $1000 rent per month then you're going to lose about $360, 000.
Sadly, loss of business income is the number one thing we see get left out for commercial flood insurance policies when this can make or break the financial income from the business property.
This is just a few things you need to keep in mind when starting a business and choosing the right flood insurance option for you. Making sure that you have the right coverage options, believe me, will get you and your business covered. It's hard to stop a natural disaster, but making sure that you have the right coverage can and will prepare you for it and if you're not sure, make sure to reach out to your insurance agent on how to best approach these things.
Remember, we have an educational background on flood mitigation. We want to help you avoid losing from flood damage, so if you have any question about flood risks, your business coverage for your flood insurance, flood insurance options, or any questions about flood, feel free to reach out and call us by clicking the links below:
