Birmingham is both literally and figuratively flooded with a lot of problems since the start of the year. One of the biggest culprits is the heavy rainfall that leads to flash flooding across the city and other parts of the state.
We've been talking about how flood insurance helps residents recover from the flood damage caused by these events, but today, we want to focus on the impacts this has on restaurants and other local businesses in Birmingham, Alabama, and how flood insurance helps these business owners bounce back from the damages brought about by the recent flooding in the city.
Birmingham Floods of '22
Just this year, Birmingham has faced a lot of flooding due to snowmelt, heavy precipitation, or a mix of both. This further adds to the data found that the flooding that Alabama's been getting significantly increased in the last 3 to 5 years compared to the last 10 to 15 years.
Last month, Birmingham experienced a couple of devastating floodings after heavy rainfall that came from storms. This caused a lot of major problems like road closures, people getting stranded in their vehicles, and overall increased flood risks. We were able to cover this in our recent blog on the Alabama floods.
This was also impacting local businesses who now have to face unwanted temporary closing because they need to still fix whatever damage these floods brought. This was one of the experiences for the people at Pies and Pints in Downtown Birmingham.
With this unprecedented flooding and the risks that this type of natural disaster can present, you might be wondering why does Alabama keep on flooding? More importantly, as a business owner, you want to know your game plan against flood loss for your investment and source of income.
Commercial Flood Insurance for Birmingham
Flood insurance is vital protection for business owners in Birmingham Alabama. Unfortunately, many business owners are not aware of the flood insurance options that are available to them for commercial insurance coverages or what the risk of flooding is.
This hurts not only your budget for your business but also the earnings you might get. So, here's where flood insurance comes in when it comes to saving you money and avoiding unnecessary losses.
There are a few different flood insurance options available to business owners in Birmingham Alabama.
The first option is a standard National Flood Insurance Program (NFIP) policy or a private flood insurance policy, both of which cover damages from flooding that occurs inside of your home or business. But how are they different?
The NFIP Way
Federal flood insurance has recently overhauled the services they're providing to home and business owners across the state. This comes in the form of the Risk Rating 2.0 program which changes the overall way of Federal Emergency Management Agency's (FEMA) approach to calculating flood insurance premium rates.
One of the biggest things that came out of this new program — which started impacting new business or newly-acquired insurances in October 2021 and now will take effect across renewing policies — is that flood zones no longer matter.
Now, we've talked about why flood zones no longer matter in Birmingham City and Alabama in general in our previous blog, but what Risk Rating 2.0 points out is that flood zones will no longer affect your rates.
This is because you will be rated based on the flood risks that your business is facing. A bit of a hard pill to swallow, but coastal or riverside restaurants in the community will find an increase in their premiums with Risk Rating 2.0. This is generally because one of the risk factors is your business' distance to water, so you might want to prepare for that as well.
A standard National Flood Insurance Program (NFIP) policy provides coverage for commercial properties of up to $500,000 on building coverage and $100,000 max on contents (the things inside the insured building).
You should keep in mind that it's best to maximize the 80% rule when buying an NFIP policy.
FEMA and the NFIP have a strict 30-day waiting period for each policy to take effect on a property. This is a good-to-know since you want to really be ahead of time if you want to buy federal flood insurance.
Now, what if this doesn't work for you and your business? That's totally understandable considering that a lot of money comes in and goes out when maintaining a business.
You might want to look into the private flood market for your needs especially if you have a big business.
The Private Flood Way
Now, one of the key similarities between the NFIP and private flood insurance is that both can provide you with enough coverage for both the premises of your business and everything inside of it. However, this comes with one important catch: Private Flood doesn't have any coverage limits.
This simply means that you can actually get more than $500,000 in building coverage when buying a private flood policy and the same goes for content coverage. Still, you should best practice the 80% rule when it comes to these coverages.
Private flood also has more flexible coverage terms, this simply means that maybe you don't need $500,000 on building coverage because you're still in the start-up business, then you may choose to have that policy written for the substantial amount you need.
You can also easily get excess flood insurance through what's called loss of use. Click here to read our blog on the loss of use coverage in flood insurance.
Business Is Good
It is important for business owners in Birmingham to have flood insurance and understand how flood insurance claims can impact you. The right policy can help protect your business from costly damages in the event of a flood and also help you easily bounce back.
For more information on flood insurance options for businesses and flooding concerns, click below to go to our Flood Learning Center where we answer your flood insurance questions.