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Flood Insurance

The sudden and tragic flooding in Ellicott City over Memorial Day weekend was a sobering reminder that sometimes lightning does strike twice in the same place, so to speak … we saw similar flooding there in 2016, and this time around the damage was even more severe.

The forecast that day called for a chance of thunderstorms; the flash-flood alerts didn’t come until much later, so there was little warning of what might occur and little chance to prepare. We hope that most of the affected businesses and residences were covered by flood insurance since many had experienced similar circumstances two years ago, but our experience says otherwise.

Does your business or residence need flood insurance? Here’s what you need to know: homeowners’ policies as well as a standard commercial insurance policy, including a Commercial Package Policy (CPP) or Business Owners Policy (BOP), does not cover flood damage.

What determines whether your damage is caused by a flood? In simple terms, a flood is an excess of water on land that is normally dry. The official definition used by the National Flood Insurance Program (NFIP) is “A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or two or more properties (at least one of which is your property). From:

  • Overflow of inland or tidal waters
  • Unusual and rapid accumulation or runoff of surface waters from any source
  • Mudflow * (as defined)
  • Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above”

A flood can be as simple as a broken water main causing a rapid accumulation of surface water affecting two or more properties as defined above.

Businesses and Residences in high flood-risk areas are sometimes required to carry flood insurance if they are financing through a federally backed mortgage. This is most often provided by Private Insurance Companies that are contracted by FEMA to service the federally backed National Flood Insurance Program (NFIP). Recent regulatory changes have expanded the qualified Flood insurance availability to other than NFIP servicing insurers. Unless required by their financial institution, many Businesses and Residences are not purchasing Flood Insurance coverage and with the volatility we’ve seen in the weather over the past several years that can be a serious mistake.

Flood insurance provides up to $500,000 in coverage for your Commercial building, 250,000 for your Residential Building. There is also available optional limited coverage for your contents. Flood insurance does not cover damage to any vehicles that might be parked on the property, so make sure your comprehensive coverage (offered by your Automobile Insurance Carrier) is adequate as well.

Start with an online search for a flood map to determine your risk level. Even if it’s near zero, give some serious thought to protecting your business and residence from this potential catastrophic peril.

Questions about flood insurance? Contact Consolidated Insurance.  For more details, also see this Summary of Coverage from NFIP.

Do you know someone in need of help as a result of the flooding in Ellicott City, or are you looking for ways to help? This article lists some of the relief efforts.