Besides residential damage, the recent flooding is so widespread we are seeing many commercial buildings and businesses affected. Flooding of your business can raise a whole new set of questions. First let’s talk about business insurance coverage. As always, the primary source to answer insurance questions is your actual insurance policy. We will discuss common provisions, but with business coverage, you can find and buy just about any coverage you can imagine—for a price.
Comprehensive General Liability
Most businesses have Comprehensive General Liability (CGL) insurance with Business Property Coverage, usually written on widely-used, generalized insurance policy forms. Often, businesses have “Business Interruption” coverage as part of their property coverage. This coverage will provided needed cash flow during the time the business is closed because of a covered peril. The bad news is that almost all standard policies exclude floods. In this way they are similar to Homeowners policies.
Flood Insurance
Flood coverage is available and can be obtained by buying a separate policy. It is most commonly written through the National Flood Insurance Program (NFIP). Up to $500,000.00 coverage is available for buildings and $250,000.00 for contents, about twice the coverage available for a residence. It is usually fairly easy to obtain excess coverage from other commercial companies to increase this coverage. NFIP Flood coverage contains no Business Interruption coverage.
Business Interruption Coverage for Floods
Many businesses assume that if they have Flood Insurance, and they also have Business Property coverage with Business Interruption, then they will have business interruption coverage if a flood occurs. This is not the case. The coverages come from separate policies, and neither policy typically provides Business Interruption coverage for flood damage. If you need business interruption coverage for floods, you will have to search out a specialty policy, as such coverage is not commonly available.
Flood Damage to Inventory
Flood coverage is a major issue for businesses that have extensive inventories. Inventory values can far exceed the value of a building, as with big box stores, warehouse facilities, car dealerships, and manufacturing companies. In these cases, careful disaster planning to include floods, should be an important part of your insurance purchase decisions.
Specialty Policies
As we have said, the things discussed above are the provisions found in most general business insurance policies. There are worldwide specialty insurance markets that can customize your coverage and policy provisions to provide almost any coverage you might need and can afford.
What To Do After a Flood
If your business has experienced flood damage, start by locating and reading your insurance policies. Call your agent and discuss your situation, the coverage you have, and ask questions. Make sure that you understand and follow the claims forms and procedures, and that you meet the filing deadlines. If you have no agent, or want a second opinion; contact an attorney or other professional with insurance coverage and claims experience to answer your questions. As with all claims: document and try to minimize the damages, make the claim in a timely manner, and follow the advice of your advisors.
Additional Information
There is help available to businesses whether they have flood insurance or not. The following resources provide additional information:
www.labi.org, The Louisiana Association of Business and Industry (LABI) website with links to various agencies that can assistance businesses with needs caused by disaster,
Here is a link to the Louisiana business emergency center and is activated during widespread emergencies to provide help to Louisiana businesses.
www.disasterassistance.gov is a FEMA website to register for assistance
www.sba.gov, the SBA (Small Business Administration) can provide emergency loans, or call 1-800-659-2955 to apply.
https://www.disasterassistance.gov/get-assistance/other-recovery-help is a government website providing general disaster relief resource information
http://www.fema.gov/disaster/4277?utm_source=hp_promo&utm_medium=web&utm_campaign=femagov_hp is dedicated to the recent Louisiana flooding disaster, and has additional information
Seale & Ross works with individuals and business clients on insurance-related matters, including flood insurance claims. To connect with the firm please email flood@sealeross.com or call 985.542.8500.