As the winter snow melts and the spring months deliver frequent rain, floods are one of the most common natural disasters. Flooding occurs when heavy rains pour over dry land or rain falls too fast for the earth to soak up all the water. Flooding also results from drainage-system failure, inadequate dams, and even tropical storms, tornadoes and hurricanes.
The worst floods happen where the land is flat and low-lying. These areas are known as flood plains. Mud, earth and large objects such as cars can be carried long distances by flood water and can dig up and destroy anything not firmly attached to the ground. You don't have to be in a flood plain to be at risk for flood damage. Floods can happen to any business at any time. Even typically dry states such as New Mexico and Arizona can be prone to flash floods that have the power to cause as much damage. The danger with flash flooding is it can happen quickly with very little or no warning.
Did you know self-storage insurance policies, like most commercial policies, don't include flood insurance? Many facility owners don't realize their standard business-insurance policy doesn't protect them until it's too late. As a matter of fact, only a small portion 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.
Before the NFIP program, people had only their community and charity organizations on which to depend. The problem was government assistance in each area wasn't extensive or consistent. Flood insurance was sparse because the people who bought it were only those living in flood-prone areas, therefore making insurance rates expensive. In the late 1960s, Congress took notice of these problems and passed the National Flood Insurance Act, which was designed to assist with costs of loss, inform and educate people to build up and away from flood-prone areas, and set forth requirements on building construction to prevent and deter flood damage.
You can get good and affordable flood coverage even if your facility is located in the boundaries of a flood plain. Flood insurance costs an average of a few hundred dollars per year for businesses, and a special, low-cost, preferred-risk policy is available for businesses in less hazardous areas. The NFIP and its write-your-own servicing companies guarantee coverage for anyone living in a high-risk area.
Depending where you are located, it may not be necessary to purchase flood insurance at maximum amounts. If you are 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. However, if you have a lot of equity in your buildings and property, you may want to consider purchasing excess flood protection, available up to twice the regular limit. This extra protection may be very prudent given today's inflation and excessive construction costs.
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 have flood insurance, even those in low-risk areas. Remember, your facility doesn't have to be near a river or a lake to be at risk.
You can purchase flood insurance at any time, but there is a 30-day waiting period from the date of your application before coverage goes into effect. It is essential to plan ahead and get coverage from your agent before flooding occurs to ensure you will be covered if disaster strikes.
Some Important Considerations
Some prestorm considerations to take would be to establish an action plan for monitoring storm activity, preparing for flood conditions and implementing emergency-salvage operations. It is important to know the history of your area to better anticipate flooding potential. Another preventable measure would be to document the interior and exterior of your facility and valuables with a camcorder or photographs to aid in the event of a claim.
Monitor weather reports through National Weather Service advisories. Every so often, see that all outside doors and windows are tightly secured and check conditions of flood doors, gates, walls, dikes, etc. Test all sump pumps for proper operation. Back up all important computer files and records and store them in a secure location. If you suspect flood conditions, shut off gas and electrical service, relocate valuable possessions to safe elevations, and stay calm if disaster threatens. Be prepared to evacuate the area immediately.
If a flood has occurred, begin salvage activities immediately, including cleaning and drying. Give 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 and return fire-protection systems to full operation. Carry valid identification along with proof of residency and your business license. Drive carefully through debris-strewn areas and those with standing water. Most important, contact your insurance-claims representative immediately for adjusting and related services.
Universal Insurance Facilities Ltd. offers a comprehensive package of coverages specifically designed 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, AZ 85067-0079; call 800.844.2101; fax 480.970.6240; e-mail [email protected]; visit www.vpico.com/universal.