Does Business Insurance Cover Flood Damage?

(Because a little water shouldn't get your business down.)
Written by Ashley Surinak
Written by Ashley Surinak

Insurance doesn’t have to be boring. That’s why we hired Ashley Surinak to be our BA insurance writer. Ashley specializes in making mundane subjects hella-entertaining.

paul martin Reviewed by Paul Martin
paul martin
Reviewed by Paul Martin

Paul Martin is the Director of Education and Development for Myron Steves, one of the largest, most respected insurance wholesalers in the southern U.S.

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Is flood damage insurance different from property insurance?
How do I get flood damage covered?
Do I need l flood insurance?
How much does flood insurance cost?
Expert(s) Found on this Page

Is flood damage insurance different from property insurance?

I own a business and now that I’m looking at insurance coverage and policies, I’m worried about any type of damage I could sustain. I was always under the impression that because flooding is a natural disaster, it would be covered under a property policy like hurricanes, tornados, and other natural disasters. Is this correct or is it a separate policy?

Flood insurance is a different beast from property insurance. This can be difficult to wrap your head around at first because property policies tend to cover natural disasters, like hurricanes and tornadoes. Logically, it would seem that floods should also be covered.

The issue is that floods – unlike the other natural disasters – are typically non-fortuitous. What I mean by this is that it floods where it floods. If you live along the Ohio river and the Ohio river floods once and damages your property, it is likely to flood again. Or, if you live in New Orleans, which is below sea level, it’s probably going to flood. Tornadoes and hurricanes are different. Sure, there are areas of the country that are never going to get a hurricane. However, these natural disasters are more fortuitous than those in an area that is prone to regular (or at least expected) flooding.

Then the problem becomes that insurance doesn’t like non-fortuity. If it’s predictable that your house is going to flood because of the location, you’re going to pay a lot more for coverage because the insurance company is basically anticipating that you will be filing a claim at some point. If you don’t live in an area prone to flooding, the opposite is generally true. 

How do I get flood damage covered?

If I want insurance coverage for flooding, do I have to purchase a special policy?

The short answer to this is yes. 

Flood insurance is an additional policy to your general property insurance. It protects against situations that cause flooding, like melting snow, heavy rain, or coastal storms that cause sea levels to rise. That being said, a lot of people can benefit from this additional coverage. But again, it is an additional cost not generally covered by your property policy.

Do I need flood insurance?

I’m not sure I want to fork over the extra money for flood coverage. Do I actually need it?

This is a tough question because there isn’t a straightforward answer. 

I would recommend flood coverage to most people. Think about it: Pretty much any area of the country is affected by heavy rain, heavy snow (which melts), or coastal flooding. That being said, flooding can wreak some serious havoc on your building or property. 

You can discuss the pros and cons with your independent agent. The main point I want you to take away here is that just because you live in a low-risk area doesn’t mean you should dismiss the idea of getting a policy entirely. 

How much does flood insurance cost?

How much will flood insurance cost if I opt for the additional coverage?

The cost of a property policy will depend upon a number of factors. The most important factors are:

  • The scope of coverage
  • How close you live to water

That being said, prices generally vary from state to state, but are also based on what you own or rent in that state. The best way to narrow down to a more specific idea of cost is with the help of your independent agent.

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