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Fire & Water - Cleanup & Restoration

Am I required to Have Commercial Flood Insurance?

4/7/2022 (Permalink)

Flood insurance form on a table with a book. FEMA has flood maps for much of the United States. If your building is in a high-risk zone, you may be required to have a flood insurance policy.

Is It necessary For Me To Have Commercial Flood Insurance?

Floods are one of nature’s most destructive processes. They can have a terrible death toll and carry toxic residue into every nook and cranny of commercial buildings. Unfortunately, this damage isn’t covered by your commercial insurance policy.

If you want or need coverage, you’ll need either a rider from your insurance provider or you’ll have to purchase a special flood policy to be covered.
So, Is flood insurance optional? Well, that depends on your situation. Here’s the three key factors that will determine if it’s mandatory.

1. Are You in a High-Risk Flood Zone?

FEMA has flood maps available for much of the United States. If your building in Tukwila, WA, is in a zone marked high-risk, you may have to have a flood policy. Some areas don’t have digital map data available, so you may have to consult your local authorities.

If your building is in a high-risk area, you probably should invest in flood coverage even if it's not required. Also, ask your local water damage restoration expert about having an assessment done on the property and develop an emergency plan in case of disaster.

Also, it’s always wise to consult flood maps before purchasing a commercial building. Local and state laws may require high-risk properties to be backfilled so the building is above the flood line, so definitely do your research!

2. Do You Have a Commercial Mortgage?

If a building has a mortgage on it, your lender may require you to have flood insurance. A few commercial insurance providers do have riders to cover flood damage, but most property owners prefer to use the NFIP flood policy, since it’s subsidized, lowering your premiums.

3. Is Your Lender Federally Insured?

To make mortgages more affordable, many are backed by federal insurance. These are typically called conventional mortgages. If you have a mortgage, your lender is covered by federal regulations and the building is in a high-risk flood zone, you’ll need coverage.

Ask your insurance agent or attorney if it applies to you. However, many experts recommend getting commercial flood insurance anyway. It can be the difference between closing your doors or staying open after a disaster.

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