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How the National Flood Insurance Program can help your business

FloodWater—it’s the foundation of life. It can also be detrimental to your business when it comes to flooding. As we’ve mentioned before, the damage from just 1 inch of water can cost more than $20,000.

That said, none of us like to think about flooding, until water is literally at—or over— our doorstep. However, there are those who want to keep the subject of flooding on everyone’s radar.

One of the primary goals of the National Flood Insurance Program (NFIP), managed by the Federal Emergency Management Agency (FEMA), is to reduce the impact of flooding on private and public structures.

How do they do that? According to the NFIP website, the program provides affordable insurance to property owners and encourages communities to adopt and enforce floodplain management regulations.

By spearheading such efforts, the program has helped reduce the socio-economic impact of disasters and urges communities to adopt and enforce floodplain management regulations.

Why is flood insurance important?

According to FEMA, floods are the most common and costly type of natural disaster in the U.S. The recent hurricanes that have hit Texas and Florida only reinforce that fact.

But it’s not just areas that are susceptible to hurricanes that are prone to flooding. Floods can happen anywhere. FEMA states that more than 20 percent of flood claims come from properties that are located outside of a high-risk flood zone.

Flooding can also be caused by breaks in dams or levees, melting snow, or a change in water flow above or below ground due to new development.

Resources and coverage

Not sure what the flood history is like in your area? You can view your state’s flood history through FEMA’s visualization tool. The interactive website shows the flood events in each state by county. Hover over the county in which your business is located to get an exact number.  

The NFIP insures losses of up to $500,000 for your building and up to $500,000 for contents.

Some commercial insurance policies include flooding as a covered peril. However, many don’t. Those that do often have a high deductible. The deductible can be as much as the $500,000 maximum coverage under the NFIP. For this reason, an NFIP flood insurance policy makes sense either as stand-alone coverage or in combination with other flood coverage.

Flood insurance premiums

Many factors go into determining the cost of your flood insurance premium. Some of the factors include:

  • Construction date: Based on when your structures were built, you could receive subsidized rates.
  • Flood zone risk level: As you might expect, higher-risk zones have higher rates. However, mitigation efforts can often reduce that rate.
  • Base Flood Elevation (BFE): This is the elevation floodwaters are estimated to have a 1 percent chance of reaching or exceeding in any given year.
  • Lowest Floor Elevation (LFE): The elevation of the lowest floor of the lowest enclosed area (including a basement) is known as LFE. The higher the LFE is above the BFE, the lower the risk and—typically—the lower the rate.
  • Deductible amount: While there might be some limits at play, the amount of coverage you choose dictates your deductible amount.

Prep now, save later

You can only purchase flood insurance through an insurance agent; you can’t buy it directly from the NFIP. If you haven’t done so already, speak with your Hortica agent to see what options are available.

The time to inquire about flood insurance isn’t when you see the water approaching your business. Think ahead. Plan ahead. Stay ahead.


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