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Staying Liquid After The Deluge: How Business Owners Can Prepare For Flood Season

A Reminder That Flood-Caused Damage Is Not Covered Under Most Commercial Property Insurance Policies

NEW YORK, March 21, 2013 /PRNewswire-USNewswire/ -- Cash flow is the lifeblood of all businesses. But in the wake of a flood, too many business owners are forced to divert substantial funds to repairing flood-damaged property, instead of growing their business. Without flood insurance, it will not be long before a business is under water, according to the Insurance Information Institute (I.I.I.). 

After Hurricane Sandy struck in October 2012, entire businesses were wiped out; their inventories and equipment destroyed. In fact, almost 40 percent of small businesses never reopen their doors following a disaster because just a few inches of water can cause tens of thousands of dollars in damage, the National Flood Insurance Program (NFIP) reports. 

"Ninety percent of all natural disasters involve flooding. Hurricane Sandy is simply the most recent and tragic example," said Loretta Worters, vice president with the I.I.I. "From 2007 to 2011, the average commercial flood claim was over $75,000; a substantial amount of money for a business to have to come up with on their own." Though the final figures are not yet in, Sandy produced billions in flood losses to businesses.

Flood coverage is excluded under most commercial property insurance policies. However, coverage for flood-caused damage to a business is available from private insurance companies and from the federal government. Although many companies purchase commercial flood insurance through the private market, more business owners are now inquiring about purchasing additional coverage through the Federal Emergency Management Agency's (FEMA) National Flood Insurance Program. When used in tandem, NFIP coverage can mitigate or "buy down" large deductibles associated with commercial flood policies or simply provide additional coverage.

For small business owners, flood coverage is available as an endorsement to a Business Owners Policy (BOP), available through some private insurance companies, if the business is located outside a flood zone. Flood insurance for small businesses is also available from the NFIP.   

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