Floods can happen to any business at any time--you don't have to be located near water to be at risk. Heavy rains or winter-water runoff can cause flood damage, even in areas not normally prone to flooding. But did you know losses due to flooding are excluded from coverage under most commercial policies?

Many self-storage facility owners don't realize their standard business-insurance policy doesn't protect them until it's too late. In fact, only a fraction of businesses exposed to the risk of flood damage are insured. Fortunately, it's easy and inexpensive to protect yourself against flood through the National Flood Insurance Program (NFIP), which is backed 100 percent by the federal government. Insuring your business now will keep you liquid when the waters do rise.

The NFIP divides risk areas into three basic groups: low, medium and high. Less than one-third of all reported flood claims, however, come from high-risk areas; and more than one-quarter come from low-risk areas. That's why most business-insurance experts strongly recommend you secure flood insurance, even those in low-risk areas. Your facility doesn't have to be located near a river or a lake to be at risk; heavy storms, winter runoff and local drainage problems can cause just as much destruction as local waterways overrun by spring rains.

The good news about flood insurance is you can get affordable coverage even if your facility is located within the boundaries of a flood plain. The NFIP and its write-your-own servicing companies guarantee coverage for anyone residing in a high-risk area. Flood insurance costs only an average of a few hundred dollars per year for businesses, and a special, low-cost preferred-risk policy is available for businesses located in less hazardous areas. Keep in mind, however, while you can purchase flood insurance at any time, there is a waiting period from the date of your application before coverage goes into effect. You can't just call your agent when the rain begins to fall to put coverage in place.

The maximum amount of flood coverage available through the NFIP is $250,000. Depending on where you live, though, it may not be necessary to purchase flood insurance at maximum amounts. If you are located outside a designated high-risk area, you can purchase partial coverage and receive an actual-cash-value payout for damages up to the purchase amount. If you have a lot of equity in your buildings and property, you may want to consider purchasing excess flood protection, which is available up to twice the regular limit. This extra protection may be very prudent given today's inflation and excessive construction costs.

Don't wait until disaster strikes your business. Assuming you 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 risk exposures and reduce damage claims. The following checklist will help you get started:

Pre-Storm Considerations

Flood-Watch Precautions

Post-Flood Activities

There is a 30-day waiting period from the date of your application for flood insurance, so don't wait; one low annual premium can protect you and your self-storage facility.

David Wilhite works for Universal Insurance Facilities Ltd., which offers a complete package of coverages specifically designed to meet the needs of the self-storage industry. For more information on Universal's coverages, or to get a quick, no-obligation quote, call 800.844.2101; fax 480.970.6240; e-mail [email protected]; visit www.vpico.com/universal.