In fact, in the past five years all 50 states have experienced floods, and at least one in four businesses that shuts down from a natural disaster never reopens. According to the U.S. government, the average commercial flood insurance claim in the past five years has been around $89,000, and the average property damage due to flooding adds up to more than $3.5 billion annually.
Floods have many causes and can occur anywhere in the country, but here are some of the most common events that lead to flooding:
- Storm surges in hurricane-prone areas
- Flash flooding, caused by periods of intense rainfall
- Mudslides, caused by long, heavy rain periods on a hill or mountainside
- Snowmelt, caused by the still-frozen ground unable to absorb excess water
- Ice jams, which are formed when an ice chunk flowing in a river or stream blocks, dams or narrows passageways, causing overflow
- Urban development, such as new construction and/or ground paving, which alters the topography by not allowing the land to drain properly
A general policy will not cover flood damage, and this type of insurance is only available through the National Flood Insurance Program (NFIP). The NFIP will cover all the types of floods discussed above, including mudslides, though it is important to note that it does not cover landslides even if they are caused by heavy rain. To make sure you get a fair price, every commercial flood agent answers to this government agency; therefore, flood insurance is backed by the government but sold through private insurers.
There are plenty of misunderstandings about flood insurance. At Kraus-Anderson Insurance, we have compiled some information about the NFIP and its coverage to help you understand its benefits.