Keep Yourself Liquid With Flood Insurance

By David Wilhite

More businesses are damaged by floods each year than by any other type ofnatural disaster. Flood damage can happen to any business at any time--you don'thave to be located near water to be at risk. Heavy rains or winter-water runoffcan cause flood damage, even in areas not normally prone to flooding. But didyou know losses due to flooding are excluded from coverage under mostcommercial-property policies?

Many business owners don't realize they are not covered against flood untilit's too late. Fortunately, it's easy and inexpensive to protect yourselfagainst flood through the the National Flood Insurance Program (NFIP), which isbacked 100 percent by the federal government. Making plans to insure yourself-storage facility against flood now will keep you liquid when the waters dorise.

The NFIP divides risk areas into three basic groups: low, medium and high.Somewhat surprisingly, less than one third of all reported flood claims comefrom high-risk areas; slightly more than one quarter come from low-risk areas.That's why many business-insurance experts strongly recommend you secure floodinsurance, even if you are located in a low-risk area. Remember, your facilitydoesn't have to be located near a river or a lake to be at risk; heavy stormscan cause just as much destruction as local waterways overrun by spring rains.

The good news about flood insurance is that anyone can get affordablecoverage, even if his facility is located within the boundaries of a floodplain. The NFIP and its write-your-own servicing companies guarantee coveragefor anyone living in a high-risk area, regardless of location. The typicalcommercial flood policy costs, on average, just a little more than a dollar aday, and a special low-cost preferred-risk policy is available for businesses inless hazardous areas. Keep in mind, however, that while you can purchase floodinsurance at any time, in most cases, there is a 30-day waiting period from thedate of your application before coverage goes into effect. You can't just callyour agent when the rain begins to fall to put coverage in place.

The maximum amount of flood coverage currently available through the NFIP is$500,000. Depending on the area where you live, though, it may not be necessaryto purchase flood insurance at maximum amounts. If you are outside a designatedhigh-risk area, you can purchase partial coverage and receive an ACV (actualcash value) payout for damages up to the purchase amount. However, if you have alot of equity in your buildings and property, you may want to considerpurchasing excess flood protection, which can provide total coverage for up to$1. This extra protection may be very prudent given today's inflation andexcessive construction costs.

Last but not least, don't wait until disaster strikes your business. Assumingyou have (or are going to get) flood insurance for your self-storage facility,now is a good time to take preventive action to minimize your flooding riskexposures and reduce damage claims. Remember, in most cases there is a 30-daywaiting period from the date of your application for flood insurance, so don'twait; one low annual premium can protect you and your facility.

In addition to loss-of-income and extra-expense coverages, UniversalInsurance Facilities Ltd. offers a complete package of coverages specificallydesigned to meet the needs of the self-storage industry. For more information,or to get a quick, no- obligation quote, write P.O. Box 40079, Phoenix, AZ85067-0079; phone 800.844.2101; fax 480.970.6240; e-mail [email protected];www.vpico.com/universal.