Commercial Insurance for Flood Coverage

A generic definition of commercial insurance for flood coverage is where there’s an overflow of water. This overflow can be from rivers streams, oceans, or any body of water. The rapid runoff of water from a torrential downpour can cause temporary flooding. Usually the definition of flooding will also encompass where the land becomes saturated to the point where that landslides and/or mudflows ensue and the damage from that is usually included in the flood definition.

Sometimes this program is written on a stand-alone basis as a policy or it can be written as an endorsement or it can be written with a DIC, Difference In Conditions policy. Normally most of the flood insurance contracts have a waiting period before coverage begins. The rationale being that it creates adverse selection for the carrier if people wait until the flooding has started and then run out and get a flood insurance policy. Most of the time there’s usually a 72 hour waiting period. Many times the coverage will not provide coverage if the location it’s not specifically listed on the policy, there also might not be coverage for the water damage if the property is not within a designated flood zone as determined by the Federal Government.

Some flood policies have provisions for coverages for ensuing losses. The potential is that flooding could cause electrical sparking and thus possibly a fire ensues. Depending upon whether the fire insurance policy and the flood insurance policy are with the same carrier and/or on the same form, property coverage, can determine whether not there is any coordination of benefits. On most flood insurance policies there is a user option for no coinsurance penalty. Therefore you as the insured can choose lesser amounts for an insured flood insurance limit versus providing hundred percent of value. Depending on the property and the flood zone deductibles can range from very low to very high.

One specific item you need to be aware of is that sometimes under the coinsurance provision within this coverage for the coverage appropriation states that a national flood insurance program policy is in place. Or it could even state that if you were eligible to purchase the national flood insurance policy this policy will only pay excess over and above what you could have collected from the national flood insurance policy program. So even though you might not have purchased that policy from the government this independent flood policy might be coordinating those benefits even though they don’t even exist.

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