This question is more relevant than you might think. According to the Federal Emergency Management Agency (FEMA), some 40 percent of small businesses never reopen after a flood because the recovery costs are simply too high to bear alone. So yes, a flood definitely has the potential to leave your small business underwater—even after it subsides.
You’ll notice standard small business insurance quotes for a typical Business Owners Policy covers many perils, from fire to theft. This does not include flood protection. That’s because business owners must purchase this additional coverage separately—sometimes by law if they’re in a designated flood zone, sometimes by choice if they feel their company could face a flooding threat.
When you consider a single inch of water can cause some $20,000 in damage, you start to look at the price of flood coverage through a different filter. By the way, the National Flood Insurance Program (NFIP) has noted some 20 percent of flood claims now come from outside of what has been considered “traditional” flood zones. With this realization comes the understanding that even if your location has always been high and dry, there’s no guarantee it will stay that way. Flood insurance will cover your company in the event it experiences damage from floodwaters. If your business is located in an area participating in the NFIP, you might qualify for a government subsidy to help defer the cost.
Should your business flood or become otherwise affected by a disaster, the U.S. Small Business Association (SBA) offers recovery loans of up to $25,000 with no collateral required. These are triggered when the president declares a region a disaster area. Secured business loans are also available up to $2 million for the replacement and repair of properties. Keep in mind though: these are loans rather than grants. You’ll be expected to pay them back.
Depending on their location and financial situation, companies can choose to take out insurance through the NFIP or try to find a private carrier who offers flood coverage. It’s likely that more options will become available in the next few years because the landscape of insurance is rapidly changing, creating more opportunity for private flood insurance carriers to break into the market.
To reiterate: Building a financial foundation for your business means comparing small business insurance quotes and finding a standard policy to protect against many common perils; getting flood insurance requires a separate, additional policy. In a lot of cases, the policy will only rebuild your facility and replace equipment. You’ll be expected to absorb lost business opportunities. Costs vary according to location, so find out if you’re in a special flood hazard area. If you are, premiums will be higher. Also, keep in mind policy lapses could result in higher premiums as you could be subjected to higher cost options.
Will a flood leave your business underwater? As with any other natural disaster or human-caused risk, preparation ahead of time is key to protecting your business’s finances. Start with personalized small business insurance quotes from CoverHound today!