Recovering from flood insurance is expensive, be it by replacing or repairing your commercial possessions within.
Why do I need flood insurance?
- As per the Federal Emergency Management Agency (FEMA), just one inch of flood water in your commercial property can cost you $27,000 in repair or recovery
- In the United States, floods cost millions of dollars in damage every year
- Over 20% of flood damage claims have been filed from areas with low risk of flood zone
- Natural phenomenon like wildfires or storm can change the topography of any location and make it more vulnerable to flooding
Residential flood damage recovery cost statistics:
Most commercial insurance types do not cover for flood damage; ask your insurance company about the policies available and each and every aspect they cover. This post covers information on how a well-chosen commercial flood insurance can help you save money.
You have two options when it comes to signing for flood insurance.
- National Flood Insurance Program (NFIP) through FEMA (Public insurance)
- Private Flood Insurance (usually backed by the state)
There is a fine line between both that needs to be defined through thorough research to choose the right one that suits your situations and requirements.
The NFIP is available for residents of 21,000 US communities and offers coverage of up to $250,000 in property damage and 100,000 in personal possession damage. The average premium cost of NPIF can range from $1000 to $1200 and is driven by factors like your community and property type risks. NFIP insurance is mostly cheaper compared to private insurance.
Private flood insurance on the other hand can be a bit expensive but comes with higher coverage and shorter processing periods. Additionally, such insurance type usually covers for temporary relocation costs after a flood.
A private insurance is ideal if you fall within the following category:
- If you reside in a low-risk flood zone
- If you wish to have coverage from unexpected floods
- If your house has considerable safety features
- If you have adopted specific precautionary measures against flood
A specialized insurance agent can help you define any fine lines between public and private flood insurance and even help you choose the type of flood insurance that suits you based on the community history, property risk types and more.
Elevating appliances and living area
Elevating your appliances is a good strategy to save money on the flood insurance premium. Both NFIP and private insurance companies usually offer lower premium if your possessions are elevated in comparison to the high-risk flood zones in your property like the garage. The possessions under consideration include Air conditions, electrical, heating, and plumbing systems.
Elevating your living area is an expensive option; however, if you successfully elevate your living area a minimum of 3 feet above the base flood elevation zone, you can save up to half on flood premium annually.
Elevated living area is validated through elevation certificates. The elevation certificates covers the following important information:
- Property location
- Property characteristics
- Flood zone type
- Lowest level elevation
This certificate is issued by NFIP and helps the insurance companies to calculate the flood-risk of your property and the premium. It is ideal to get your elevation certificate validated by a civil engineer to identify errors due to environmental factors, base flood elevation and other outdated factors.
Flood proofing your property can help you save up to 90% on flood insurance premiums. Flood proofing can be done via the following:
- Protecting wooden skirting boards by varnishing
- Elevating appliances
- Adding flood openings or vents
With flood insurances, you have a deductible, i.e. the money that you have to pay from your savings prior to getting paid by the insurance body. Increasing your deductible will result in lower premiums.
However, it is advised that you talk to your insurance agent to weigh the risks associated with this strategy as an insurance agent can help you decide based on all the critical factors that affect your situation.
Finding a balance between the flood insurance coverage type and your property setting is a task that requires maximum research and foresight. Such a critical act, once completed, could keep you under an ideal cover for long. This is why we recommend you to consult with a flood insurance specialist to put that most important first step forward.