Damage from a flood is often very detrimental to a business. While many different types of damage are covered by standard commercial property policies, coverage for flooding is often excluded and a flood insurance policy must be purchased separately. Because of this and other factors, knowing what is covered under flood insurance in Texas can be incredibly helpful to commercial policyholders.

Texas Flood Insurance Coverage

One of the most daunting and costly forms of property damage is flooding. In addition to subsequent consequences of flooding like mold and electrical damage, a flood can cause severe structural damage to a commercial property. As floodwaters often move rapidly, it can push on the sides of a building’s interior, weakening the structure of the property and at times separating it from its foundation. According to a recent NBC News article, structural damage from flooding is projected to cost $13.5 billion in 2022 and increase to over $16.9 billion by 2052. This especially affects coastal areas like Texas and Louisiana that are often prone to flooding from hurricanes.

With the overall cost that flood damage can cause to commercial properties, it’s no wonder why many automatically assume that it’s covered under standard property damage policies. Unfortunately, this is not the case, as flood damage can only be covered through two means: the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program or private flood insurance: 

  • The National Flood Insurance Program (NFIP): Under the NFIP, a flood is defined as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or two or more properties. The program is designed so that floodplain management and flood insurance complement and reinforce one another. Through the NFIP, the maximum building coverage provided can be up to $250,000. If the replacement cost for the property is more than $250,000, policyholders will need to purchase an excess coverage policy to be fully insured. 
  • Private Flood Insurance: Private flood insurance can be obtained through various private insurance companies rather than the federal government. In certain cases, commercial property owners will choose to purchase private flood insurance over purchasing coverage through the NFIP due to the NFIP’s coverage cap of $250,000. Private flood carriers provide up to $1 million in coverage, with some policies offering even higher limits.

What Does Flood Insurance Cover?

While the NFIP and private flood insurance markets are separate from one another, the policies purchased through them often cover the same types of damage. Generally, commercial flood insurance policies will cover damage to the property itself as well as equipment, appliances, and personal items within the structure, including: 

Building Coverage

  • Electrical and plumbing systems
  • Furnaces and water heaters
  • Appliances
  • Permanently installed carpeting
  • Permanently installed cabinets, paneling, and bookcases
  • Windows
  • Foundation walls, staircases, and anchorage systems
  • Detached garages
  • Fuel tanks, well tanks, and pumps
  • Solar equipment

Contents Coverage 

  • Personal property
  • Furniture
  • Curtains
  • Portable and window air conditioners
  • Currency, precious metals, and valuable items

What Doesn’t Flood Insurance Cover?

Although flood insurance purchased through the NFIP or the private market will cover a variety of things, some items are often excluded from coverage. A “flood” for the purposes of insurance typically means water overflowing from rivers or streams, storm surge, snowmelt, blocked storm drainage systems, broken dams, or other causes of excess water on land that is normally dry. The NFIP requires the excess of water to affect at least two acres of land or two or more properties. This means water filling your business due to plumbing issues or a burst pipe, is not considered flooding and will not be covered. 

Commercial flood insurance also often does not offer coverage for any business property that is outside of the primary insured structure or for commercial vehicles. Flood coverage by the NFIP also does not cover financial losses due to business interruption. However, private insurers may offer business interruption coverage among others that the NFIP does not.

Commercial Flood Insurance Coverage Attorneys

A flood can be incredibly devastating to a business and leave owners with no means to turn a profit for a substantial period of time. Despite having the proper coverage in place to mitigate the cost of such detrimental damage, insurance carriers notoriously utilize bad faith practices to undermine the claims process. At Raizner Slania, our experienced attorneys understand the many ways insurance carriers attempt to delay, underpay, and/or deny valid commercial property damage claims. If you are dealing with an insurance provider that has failed to pay your commercial property flood claim, we can help. Contact our office today for more information.

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