Flood Insurance

Flood Insurance covers damage from rising or overflowing water—storm surge, river overflow, heavy rainfall that ponds, and water that enters a building at or below ground level. Standard property and windstorm policies exclude flood, so a separate flood policy is what pays for saturated floors, ruined equipment, and structural damage caused by that water. Most commercial and residential flood coverage is written through the National Flood Insurance Program or a private flood market; limits, deductibles, and waiting periods differ from a typical property policy, and coverage usually begins after a waiting period unless it is tied to a loan closing.

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Flood insurance does not replace wind or hurricane coverage. Water that comes through a roof or window opened by wind is generally a wind claim; water that rises from outside is a flood claim. For commercial real estate the important details are whether the building and contents are both insured, whether the form is actual cash value or replacement cost, basement and machinery limitations, and whether a private policy can provide higher limits than the NFIP. Properties in a mapped flood zone are often required to carry it by a lender; properties outside a high-risk zone can still flood and are often eligible for lower-cost coverage. The policy should be coordinated with the property and business-interruption forms so a storm that brings both wind and water does not leave part of the loss uninsured.