Flood Insurance for Your Business

Business Flood InsuranceCourtesy of iii.org

Natural disasters can be devastating to businesses. While damage caused by some types of natural events—such as lightning or wind—will usually be covered by commercial property insurance, you need a special policy if you want protection from flood damage. This Q&A will help you understand this type of coverage and determine whether your business needs it.

Frequently asked questions about flood insurance

Q. Does my commercial property insurance include flood coverage?

A. No. Damage from flooding, including flooding generated by hurricane-generated storm surge, typically is not covered under a standard commercial policy, including a Commercial Package Policy (CPP) or a Business Owners Policy (BOP). Flood insurance is available from the federal government’s National Flood Insurance Program (NFIP).

Q. What does flood insurance cover?

A. Flood insurance covers damage to your building and contents caused by flood. This includes losses resulting from water overflowing rivers or streams, heavy or prolonged rain, storm surge, snow melt, blocked storm drainage systems, broken dams or levees, or other similar causes. To be considered a flood, waters must cover at least two acres or affect two properties. Generally if water comes from above—for instance from rain or melting snow overflowing gutters and leaking onto your inventory—you’ll be covered by your standard commercial property insurance.

Q. What isn’t covered by flood insurance?

A. Property outside your building generally will not be covered. For instance, landscaping and septic systems will not be covered. In addition, flood insurance will not cover damage to your business vehicles, but this can be included in the optional “comprehensive” portion of your business vehicle insurance. Financial losses caused by business interruption or loss of use of insured property are also not covered.

Q. Do I have to purchase flood insurance?

A. If your commercial property is located in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, you are required to purchase a flood insurance policy.

Q. How do I determine my risk for flood damage?

A. Location is the most important factor for weighing your risk for flood damage. Is your business located in or near a flood zone? (Flood map search tools can be found online.) In what part of the building is your businesses equipment and inventory located? Anything housed on a lower floor, for instance, will be at greater risk.

Q. Where can I purchase flood insurance?

A. Flood insurance is available from the NFIP and some private insurers. However, NFIP coverage can only be purchased through an insurance professional; you cannot buy it directly from the federal government. To find a local insurance professional who is familiar with the National Flood Insurance Program, contact the NFIP at 888-379-9531 for an agent referral.

Q. How long does it take to get flood coverage?

A. Typically, there’s a 30-day waiting period from date of purchase before your policy goes into effect.

Q. Does my flood policy cover mold?

A. Damage from mold and/or mildew resulting from the after-effects of a flood is covered, but each case is evaluated on an individual basis. Mold/mildew conditions that existed prior to a flooding event are not covered, and after a flood, the policyholder is responsible for taking reasonable and appropriate mitigation actions to eliminate mold and mildew.

Q. How much flood coverage can I get?

A. Commercial flood insurance provides up to $500,000 of coverage for your building and up to $500,000 for its contents.

Q. What if I need more coverage?

A. You can purchase what’s called excess insurance coverage to rebuild properties valued above National Flood Insurance Program (NFIP) limits. Excess coverage includes protection against business interruption.

What is FEMA Disaster Assistance

FEMA Disaster AssistanceCourtesy of iii.org

Qualifying for FEMA assistance

 

Q. How can I tell if my area has been declared a disaster that qualifies for FEMA assistance?

A. The DiasterAssistance.gov website has a tool that will help you find out if you live in a declared disaster area.

Q. If I received disaster assistance last year, could I get it again this year?

A. Assistance may be available if you suffered damages from a previous, federally declared disaster.

Q. My child is a U.S. citizen, but I am not. Can I apply for FEMA disaster assistance?

A. If anyone in an affected household is a U.S. citizen, non-citizen national or qualified alien (aka a Green Card holder), he or she is eligible to apply for FEMA disaster assistance.

If a minor child is eligible by these criteria, even when other members of the family are not, the family can file an application on the child’s behalf. In this case, all identification documents have to be under the child’s name and Social Security number. A copy of the child’s Social Security card and birth certificate are acceptable verification. This information can be mailed to FEMA or brought to a Disaster Recovery Center.

Q. Could FEMA assistance affect my Social Security benefits, federal taxes, food stamp (SNAP) eligibility or Medicaid?

A. No. FEMA assistance does not affect benefits from other federal programs and is not considered taxable income.

Applying for FEMA assistance

 

Q. If I live in a declared disaster area, how do I apply for FEMA assistance?

A.You can apply at www.DisasterAssistance.gov or call the FEMA Helpline. For comprehensive information about the program, FEMA offers a downloadable book entitled, Individuals, Households Program Unified Guidance.

Q. What is the inspection process like after I apply for disaster assistance?

The process slightly differs depending on your insurance situation.
A.If you do not have insurance, an inspector will contact you after you apply to schedule a time to meet you at your damaged home.

If you do have homeowners insurance, you need to file your insurance claim and provide FEMA with a decision letter (settlement or denial) from your insurance company before FEMA issues an inspection. There is an exception for situations where the damages are caused by flooding and you have flood insurance. In that instance, FEMA will issue an inspection before receiving a copy of your flood insurance decision letter to evaluate your eligibility for temporary living expenses since these are not covered by flood insurance.

Q. How soon will I know if I qualify for assistance?

A. About 10 days after the inspection FEMA will decide if you qualify for assistance. If so, FEMA will send you a check by mail (or direct deposit) with an explanation of what the money covers (i.e. rent or home repair).

Q. What happens if FEMA says I don’t qualify for assistance?

A. If FEMA determines that you are ineligible for any reason, you will receive a letter and be given a chance to appeal. Appeals must be in writing and mailed within 60 days of the determination. Read the letter carefully for the reason of ineligibility before filing your appeal.

Q. After I applied for disaster assistance, I got a Small Business Administration (SBA) Disaster Loan application. What is that for?

A. The SBA offers low interest disaster loans to assist small businesses and homeowners in their recovery. To be considered for a loan or certain types of grant assistance, such as transportation, personal property, and moving and storage, you must complete and return the application.

Q. Will my family get assistance faster if we each apply separately?

A. No. If two members of the same household apply for the same damaged home, FEMA assistance could actually be delayed. If more than one member of a household has applied, the additional registrants should call the FEMA Helpline to withdraw their applications. Once this occurs, the original registration for the household can be processed for assistance.

Q. I’ve already cleaned up the damage to my home and made repairs. Is it too late to register once the work is done?

A. No. You may be eligible for reimbursement of your cleanup and repair costs, even if repairs are complete. The important thing is to document the expenses you incur. It is a good idea to take before-and-after photos for your records.

FEMA rental assistance payments

 

Q. Why didn’t I receive rental assistance when my home can’t be lived in?

A. If you cannot live in your home because of disaster damage and you did not receive rental assistance, please contact FEMA to check on your status.  It could be that during the inspection you indicated that you were unwilling to relocate. If so, FEMA would not move forward to issuing a rental assistance check for you to move to another location.

Q. How long will FEMA provide rental assistance?

A. Rental assistance can be provided for up to 18 months from the date of declaration while you are setting up your permanent housing plan. If you still cannot return to your home after your initial period of assistance, you will be sent a letter on how to recertify.

FEMA assistance payments

 

Q. If I received a settlement from my insurance but still have additional needs, what can I do?

A. As soon as you receive an insurance settlement, you should provide a copy to FEMA and identify any unmet needs you have. Although FEMA cannot duplicate benefits that your insurance provided, FEMA may be able to assist you with lost essential items not covered by insurance and can also help you find resources through other recovery partners.

Q. Why did I get a different amount of home repair assistance than my neighbor?

A. Each survivor’s case is unique. There are several factors involved, including insurance status and the extent and type of damage found during the home inspection. If you feel that the assistance you received does not cover your needs—for example, the funding you received for repairs is less than the estimates you’ve received from contractors and you have not yet met the FEMA maximum grant—you can appeal.

Additional resources

DisasterAssistance.gov

FEMA Helpline: 1-800- FEMA (1-800-621-3362)

TTY 1-800-462-7585

711 or Video Relay Service (VRS) 1-800-621-3362

FEMA Individuals, Households Program Unified Guidance book download

SBA Disaster Loans & Grants

What is Business Interruption Insurance?

Car Business Interruption InsuranceCourtesy of iii.org

Business interruption insurance can be as vital to your survival as a business as fire insurance. Most people would never consider opening a business without buying insurance to cover damage due to fire and windstorms. But too many small business owners fail to think about how they would manage if a fire or other disaster damaged their business premises so that they were temporarily unusable. Business interruption coverage is not sold separately. It is added to a property insurance policy or included in a package policy.

A business that has to close down completely while the premises are being repaired may lose out to competitors. A quick resumption of business after a disaster is essential.

  1. Business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. Business interruption insurance covers the revenue you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.
  2. Make sure the policy limits are sufficient to cover your company for more than a few days. After a major disaster, it can take more time than many people anticipate to get the business back on track. There is generally a 48-hour waiting period before business interruption coverage kicks in.
  3. The price of the policy is related to the risk of a fire or other disaster damaging your premises. All other things being equal, the price would probably be higher for a restaurant than a real estate agency, for example, because of the greater risk of fire. Also, a real estate agency can more easily operate out of another location.

Extra expense insurance

Extra expense insurance reimburses your company for a reasonable sum of money that it spends, over and above normal operating expenses, to avoid having to shut down during the restoration period. Usually, extra expenses will be paid if they help to decrease business interruption costs. In some instances, extra expense insurance alone may provide sufficient coverage, without the purchase of business interruption insurance.

Be Sure to Protect Your Valuables Today!

Courtesy of iii.org

The holidays are a time of giving and receiving gifts, but would you be able to replace those gifts if they were destroyed in a fire or other disaster? A home inventory is the best way to protect your personal possessions, yet only 50 percent of homeowners said they had an inventory in a 2016 Insurance Information Institute (I.I.I.) survey. That’s where Know Your Stuff®, the free, award-winning home inventory app can help.

The I.I.I.’s Know Your Stuff® home inventory app allows you to enter information on mobile or desktop and syncs across all your devices so you can access it anywhere, at any time. It can help you:

  • Purchase enough insurance to replace the items you own, if they are stolen or damaged.
  • Get insurance claims settled faster.
  • Substantiate losses or charitable donations for tax purposes.
  • Keep track of items that require maintenance or repair.
  • Declutter and organize your home.

“With the average property damage and liability claim costing more than $9,000 and about one in 15 insured homes having a claim each year, it’s important for homeowners to protect their assets,” said Loretta Worters, a vice president with the I.I.I. “Renters should also consider taking a home inventory.”

To simplify the task of creating an inventory, the Know Your Stuff® app allows you to take photographs of your possessions and organize them according to the room in which the items are located.

With the Know Your Stuff® Home Inventory app, you get:

  • Secure free cloud storage of your inventory data. You can also store and manage all your insurance policy information, including contact information for your insurance professional and your policy numbers.
  • Downloadable reports for easy recordkeeping and claims filing.
  • A tool that is backed by the expertise of the I.I.I., a leading independent insurance research and communications organization.

Know Your Stuff® also allows you to keep track of multiple properties and insurance policies. An opt-in service provides integrated weather alerts for your area as well as updates and tips on how to prepare your home against severe weather.

Hurricane Forecast 2020

Courtesy of iii.org

The 2020 Atlantic hurricane season activity is projected to be “extremely active,” according to Triple-I non-resident scholar Dr. Phil Klotzbach.

Dr. Klotzbach, an atmospheric scientist at Colorado State University (CSU), and his team issued an updated forecast on August 5. They project the 2020 Atlantic hurricane season will have 24 named storms (up from 20 in the previous forecast), 12 hurricanes (up from nine), and five major hurricanes (up from four).

The 24 named storms include the storms that have already formed. An average season has 12 named storms, six hurricanes and three major hurricanes.

Hurricane Forecast 2020

The activity is driven in part by reduced vertical wind shear. Strong wind shear tears apart hurricanes. Observed wind shear has been very low in July, which means it’s also expected to be low at the peak of the season from August to October.

The probabilities of U.S. hurricane landfalls are also elevated simply because we are expecting more Atlantic storms. The U.S. has already experienced two landfalls this season with Hanna and Isaias.

People in hurricane-prone areas are advised to have a plan in place and follow the directions of local emergency managers if storms threaten.

Hurricane Forecast 2020

Courtesy of iii.org

The 2020 Atlantic hurricane season activity is projected to be “extremely active,” according to Triple-I non-resident scholar Dr. Phil Klotzbach.

Dr. Klotzbach, an atmospheric scientist at Colorado State University (CSU), and his team issued an updated forecast on August 5. They project the 2020 Atlantic hurricane season will have 24 named storms (up from 20 in the previous forecast), 12 hurricanes (up from nine), and five major hurricanes (up from four).

The 24 named storms include the storms that have already formed. An average season has 12 named storms, six hurricanes and three major hurricanes.

Hurricane Forecast 2020

The activity is driven in part by reduced vertical wind shear. Strong wind shear tears apart hurricanes. Observed wind shear has been very low in July, which means it’s also expected to be low at the peak of the season from August to October.

The probabilities of U.S. hurricane landfalls are also elevated simply because we are expecting more Atlantic storms. The U.S. has already experienced two landfalls this season with Hanna and Isaias.

People in hurricane-prone areas are advised to have a plan in place and follow the directions of local emergency managers if storms threaten.

Liability Insurance

Liability Insurance CoverageCourtesy of iii.org

Do you or your business provide professional services or advice to other businesses or individuals? Could your counsel or service lead to losses by your client for which you could be held responsible? If so, you’ll likely want to purchase professional liability insurance, also known as errors and omissions insurance (E&O).

Claims not covered by general liability insurance that are covered by professional liability insurance include negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice.

What types of businesses need professional liability insurance?

In some states, professional liability insurance is required, especially for attorneys and doctors. Legal and medical malpractice insurance policies are special types of professional liability insurance. Other professionals that should consider professional liability insurance include:

  • Accountants
  • Architects
  • Engineers
  • Graphic designers
  • Information technology (IT) consultants
  • Insurance professionals
  • Investment advisors
  • Management consultants
  • Real estate agents and brokers
  • Software developers

This list is not exhaustive. Consult with your insurance professional or inquire with your profession’s trade association to determine if you might need professional liability coverage.

What’s covered… and what’s not

There are two types of professional liability polices: claims-made and occurrence. Most professional liability insurance policies are “claims-made,” meaning that the policy must be in effect both when the event took place and when a lawsuit is filed for a claim to be paid. If, however, you change careers or retire, you may want to purchase an “occurrence” policy that will cover any claim for an event that took place during the period of coverage—even if the suit is filed after the policy lapses.

Professional liability insurance will pay the cost of legal defense against claims and payment of judgments against you, up to the limit of the policy. In general, coverage does not extend to non-financial losses or losses caused by intentional or dishonest acts. Other fees, such as licensing board penalties, may also be included. Policies will generally have a deductible ranging from $1,000 to $25,000. The amount of professional liability insurance you will need and how much it will cost depends upon the size of your business and the level of risk it poses.

You may be able to include professional liability coverage in a Commercial Package Policy (CPP) as an endorsement. Note, however, the professional liability coverage is not included in an in-home business policy or Business Owners Policy (BOP).

Insurance Guide Hurricane Season 2020

Hurricane Insurance GuideCourtesy of iii.org

Hurricane season takes place June 1 – November 30 every year. Don’t wait until after you have a loss to check your insurance—review your homeowners or renters policies to make you have the right coverage in the event you’re hit with a destructive storm.


Make sure your home’s structure has adequate coverage

Standard homeowners insurance covers the structure of your house for disasters such as hurricanes and windstorms, along with a host of other disasters. It’s important to understand the elements that might affect your insurance payout after a hurricane, and adjust your policies accordingly.

  • Understand your hurricane/windstorm deductible – Insurers in every coastal state from Maine to Texas include separate deductibles for hurricanes and/or windstorms in their homeowners policies, stated on the Declarations (front) page of your homeowners policy.

A hurricane deductible is applied only to hurricanes, whereas a windstorm deductible applies to any type of wind. If your policy has a hurricane deductible, it will clearly state the specific “trigger” that would cause the deductible to go into effect.

Unlike the standard “dollar deductible” on a homeowners policy, a hurricane or windstorm deductible is usually expressed as a percentage, generally from 1 to 5 percent of the insured value of the structure of your home.

If you live in an area at high risk for hurricanes, your hurricane deductible may be a higher percentage. Depending on your insurer and the state where you live, you may have the option of paying more money in premiums in exchange for a lower deductible.

Like any deductible, a hurricane or windstorm deductible will affect the bottom line of your insurance payout. If you have a high hurricane or windstorm deductible consider putting aside the additional money you may need to rebuild your home.

One common exclusion is flooding. People tend to underestimate this risk, but 90 percent of all natural disasters—especially hurricanes—include some form of flooding. If you live in a flood zone or a hurricane-prone area, a separate flood insurance policy is a must.

Another common exclusion is sewer backups (which is also not covered by flood insurance) Sewer backup insurance is also good to have in hurricane-prone areas.

Get to know all of the exclusions in your policy and either talk to your insurance professional about purchasing separate coverage, or be prepared to pay out of pocket for the damages that are excluded in your policy.

  • If you own a co-op apartment or condo – check with your management company and the bylaws to understand what is covered under the building’s master insurance policy versus what damages you need to cover in your own co-op or condo owners insurance policy.

Make sure your possessions are adequately insured

Imagine the cost of repurchasing all of your furniture, clothing and other personal possessions. Whether you have homeowners insurance or renters insurance, your policy provides protection against loss or damage due to a hurricane.

  • Determine the value of your possessions with a home inventoryCreating a full inventory of your belongings and their value will make it easy to see if you are sufficiently insured for either replacement cost or cash value of the items. It will also help speed the insurance claims process and help provide proof of losses for tax or disaster aid purposes.
  • Review your policy to ensure you’re adequately covered – Homeowners policies provide approximately 50 to 70 percent of the amount of insurance you have on the structure of your home. If you rent, know that your landlord’s insurance will only cover the structure of your home—you need a renters policy to protect your possessions against loss or damage.

Make sure your policy provides enough coverage for additional living expenses

Additional living expenses (ALE) covers the extra costs incurred if you need to live elsewhere because your home is rendered uninhabitable as the result of a hurricane (or any other insured disaster). While your home or apartment is being repaired or rebuilt, ALE covers hotel bills, restaurant meals, etc.—expenses over and above what your customary living expenses would be at home. Generally, the ALE policy limit is 20 percent of the amount of insurance coverage on the structure of your home. Standard renters policies also provide for ALE.

  • Most insurers offer the option of higher coverage limits – Depending on where you live (which may dictate your expenses), you may want to consider a higher ALE.
  • ALE reimbursements may be limited to a specified amount of time – Make sure you’re comfortable with the time limits in your policy.
  • If you rent out part of your home, ALE coverage also reimburses you for lost rental income. Make sure your policy reflects the current amount of your rental income.

Hurricane Insurance Guide 2020

Hurricane Insurance GuideCourtesy of iii.org

Hurricane season takes place June 1 – November 30 every year. Don’t wait until after you have a loss to check your insurance—review your homeowners or renters policies to make you have the right coverage in the event you’re hit with a destructive storm.


Make sure your home’s structure has adequate coverage

Standard homeowners insurance covers the structure of your house for disasters such as hurricanes and windstorms, along with a host of other disasters. It’s important to understand the elements that might affect your insurance payout after a hurricane, and adjust your policies accordingly.

  • Understand your hurricane/windstorm deductible – Insurers in every coastal state from Maine to Texas include separate deductibles for hurricanes and/or windstorms in their homeowners policies, stated on the Declarations (front) page of your homeowners policy.

A hurricane deductible is applied only to hurricanes, whereas a windstorm deductible applies to any type of wind. If your policy has a hurricane deductible, it will clearly state the specific “trigger” that would cause the deductible to go into effect.

Unlike the standard “dollar deductible” on a homeowners policy, a hurricane or windstorm deductible is usually expressed as a percentage, generally from 1 to 5 percent of the insured value of the structure of your home.

If you live in an area at high risk for hurricanes, your hurricane deductible may be a higher percentage. Depending on your insurer and the state where you live, you may have the option of paying more money in premiums in exchange for a lower deductible.

Like any deductible, a hurricane or windstorm deductible will affect the bottom line of your insurance payout. If you have a high hurricane or windstorm deductible consider putting aside the additional money you may need to rebuild your home.

One common exclusion is flooding. People tend to underestimate this risk, but 90 percent of all natural disasters—especially hurricanes—include some form of flooding. If you live in a flood zone or a hurricane-prone area, a separate flood insurance policy is a must.

Another common exclusion is sewer backups (which is also not covered by flood insurance) Sewer backup insurance is also good to have in hurricane-prone areas.

Get to know all of the exclusions in your policy and either talk to your insurance professional about purchasing separate coverage, or be prepared to pay out of pocket for the damages that are excluded in your policy.

  • If you own a co-op apartment or condo – check with your management company and the bylaws to understand what is covered under the building’s master insurance policy versus what damages you need to cover in your own co-op or condo owners insurance policy.

Make sure your possessions are adequately insured

Imagine the cost of repurchasing all of your furniture, clothing and other personal possessions. Whether you have homeowners insurance or renters insurance, your policy provides protection against loss or damage due to a hurricane.

  • Determine the value of your possessions with a home inventoryCreating a full inventory of your belongings and their value will make it easy to see if you are sufficiently insured for either replacement cost or cash value of the items. It will also help speed the insurance claims process and help provide proof of losses for tax or disaster aid purposes.
  • Review your policy to ensure you’re adequately covered – Homeowners policies provide approximately 50 to 70 percent of the amount of insurance you have on the structure of your home. If you rent, know that your landlord’s insurance will only cover the structure of your home—you need a renters policy to protect your possessions against loss or damage.

Make sure your policy provides enough coverage for additional living expenses

Additional living expenses (ALE) covers the extra costs incurred if you need to live elsewhere because your home is rendered uninhabitable as the result of a hurricane (or any other insured disaster). While your home or apartment is being repaired or rebuilt, ALE covers hotel bills, restaurant meals, etc.—expenses over and above what your customary living expenses would be at home. Generally, the ALE policy limit is 20 percent of the amount of insurance coverage on the structure of your home. Standard renters policies also provide for ALE.

  • Most insurers offer the option of higher coverage limits – Depending on where you live (which may dictate your expenses), you may want to consider a higher ALE.
  • ALE reimbursements may be limited to a specified amount of time – Make sure you’re comfortable with the time limits in your policy.
  • If you rent out part of your home, ALE coverage also reimburses you for lost rental income. Make sure your policy reflects the current amount of your rental income.

More About Flood Insurance

Flood InsuranceCourtesy of iii.org

Wind-caused property damage is covered under standard homeowners, renters and business insurance policies. Renters’ insurance covers a renter’s possessions; the landlord insures the structure.

Property damage to a home, a renter’s possessions, and a business—resulting from a flood—is generally covered under FEMA’s National Flood Insurance Program (NFIP) and through some private insurers.

Private-passenger vehicles damaged or destroyed by either wind or flooding are covered under the optional comprehensive portion of an auto insurance policy. Nearly 80 percent of U.S. drivers choose to purchase comprehensive coverage.

“Superstorm Sandy, which impacted the Northeast, including New Jersey and Long Island, was the deadliest and most destructive storm of the 2012 Atlantic hurricane season, causing billions of dollars in insured losses,” said Dr. Michel Leonard, CBE, Vice President and Senior Economist, Triple-I, who also gathered the content posted at the Triple-I’s Resilience Accelerator website. “Homeowners and business owners should use flood maps to better understand their current exposure which can help determine whether their insurance is adequate.”

Most people who live in flood-prone areas of the country lack flood insurance. The average take-up rate for flood insurance—meaning the percentage of property owners who purchase these policies—stood at 15 percent nationwide, a Triple-I survey found in 2018.  In Ocean County, NJ, for example, the take-up rate in 2018 was 17.8 percent, compared to Suffolk County, Long Island, where only 6.2 percent of properties have flood insurance coverage.

Tropical Storm Fay is the sixth named storm of 2020, marking the first time six tropical cyclones have formed in the Atlantic basin so early in the calendar year.  Dr. Phil Klotzbach, a Triple-I non-resident scholar, and his atmospheric science team at Colorado State University, released an updated forecast last month which called for “well above-average” tropical cyclone activity for the balance of 2020.