Insurance Corner

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

  • Establish an action plan for monitoring storm activity, preparing for flood conditions and implementing emergency-salvage operations.
  • Know the history of the area in which you are located to better anticipate flooding potential.
  • Document the interior and exterior of your facility and business-personal property with a video recorder or Polaroids to aid in the event of a claim.

Flood-Watch Precautions

  • Monitor weather reports through National Weather Service advisories.
  • Ensure all outside doors and windows are tightly secured.
  • Check conditions of flood doors, gates, walls, dikes, berms, etc.
  • Test all sump pumps for proper operation.
  • Shut off gas and electrical service immediately upon detecting flood conditions.
  • Back up all vital computer files and records and store in a secure location.
  • Relocate valuable possessions to safe elevations.
  • Stay calm if disaster threatens. Be prepared to evacuate the area immediately.

Post-Flood Activities

  • Begin cleaning and drying salvage activities immediately, giving priority to your most valuable property and possessions.
  • Remove flood debris and drain all standing water as soon as possible.
  • Dehumidify damp areas as thoroughly as conditions allow.
  • Return fire-protection systems to full operation as soon as possible.
  • Carry valid identification, along with proof of residency and your business license.
  • Drive carefully through debris-strewn areas and areas with standing water.
  • Contact your insurance claims representative immediately for adjusting and related services.

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

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