Making Sure You Are Covered for a Commercial Flood
Weather events that cause flooding are occurring with increasing frequency. If your Commerce City, location is at risk for flooding or your property has been water damaged, this discussion about commercial insurance coverage may answer some of your questions. Will your business insurance cover flood cleanup and restoration at your commercial facility? The answer is, it depends. Most types of commercial flood damage are excluded from your conventional insurance policy but would be covered under a special flood insurance policy.
Commercial flood policies are purchased separately from the government’s insurance program. The source of the flooding determines which type of coverage applies. If any of the following caused your business to flood, a government insurance policy would generally cover you:
Overflowing rivers or streams
Blocked storm drainage systems
Storm surge from hurricanes, severe storms or snowmelt
Broken dams or levees
Broken municipal water mains
You may be required to purchase a government-issued policy if your property is in a high flood-risk area. Your insurance agent will generally be able to help you evaluate and purchase flood insurance.
Storm-related water damage will be covered by your conventional insurance policy if the damage came from above ground level. For instance, if hail or a tree branch breaks your skylight and heavy rain causes damage to your property, your commercial policy would be responsible. Most types of internal water damage, such as broken pipes and leaking appliances, would also be eligible for coverage by your business policy.
Even if your property is not in a designated high-risk flood area, you could still bear some flood risk and benefit from purchasing flood coverage. If you are located in an area known for heavy snowmelt or significant rainstorms, you bear some risk. Water can back up behind a clogged storm drain and quickly lead to rising floodwaters.
Flood damage is often quite costly, and it’s important to understand your coverage options for various scenarios. Then you can decide whether to pursue government-issued insurance, rely on your commercial insurance policy, or purchase additional flood insurance.