Navigating the Stormy Waters of Business Flood Insurance

Road Sign Halfway Underwater in Flood


Navigating the Stormy Waters of Business Flood Insurance

Understanding flood insurance can feel like a tidal wave of information. Although flood coverage sounds like a relatively simple concept, there are several key factors to focus on. With this guide, you’ll be able to assess whether or not flood coverage is something for your business to consider.

First, let’s cover the how and why of flood insurance:

  • What does flood insurance cover?
    • “Flood insurance covers damage to your building and contents caused by flood. This includes losses resulting from water overflowing from rivers or streams, heavy or prolonged rain, storm surge, snow melt, blocked storm drainage systems, broken dams or levees, or other similar causes.”1
  • Is flood covered on the typical property policy?
    • No, flood insurance is not included on a standard property, general liability, or umbrella policy.
  • Do I have to buy flood coverage?
    • This depends on many different factors, including whether or not you have a mortgage or a lender. If you are in a high-risk area, the lender may require you to purchase coverage in order to protect their insurable interests. There are other factors to consider as well. Is the property near a body of water, and are there levees protecting you from a body of water? Are you located in an area that is at a basin or a sunken area that has potential to flood? These are all questions to consider.
  • Is there a way to check if I’m in a high-risk flood zone?
    • Yes, there is! The best place to start is FEMA’s website, which is listed at the bottom of the article.
  • Who can I purchase flood insurance from?
    • This will depend on the location of the property. The government created a National Flood Insurance Program (NFIP) to help provide coverage for anyone that wants to purchase coverage. There are private insurers that also can provide coverage, depending on location.
  • How much are you able to purchase?
    • Typically, you can purchase up to $500,000 for the building and up to $500,000 for contents.
  • What if I have more than $500,000 in my building or contents?
    • If you require higher limits, reach out to your agent, and they can either go through the NFIP or a private insurer to provide additional coverage.


BUsiness Flood Insurance in Dallas, TX


Now we have the how and why, but what about the “where”? You’re ready to check your property on the FEMA website. Unfortunately, the government doesn’t give you much help because what should be an easy task now turns into trying to translate the alphabet soup that is “flood zone type.” Let’s take a look at the types of flood zones that you will come across.

3 Clean Up Crew Members Sweeping Out Flood Water
  • What are flood zones?
    • They are the land area that could be covered by flood waters. FEMA has placed more than 20,000 communities in the United States in flood zone categories. All insurance carriers rely on their flood mapping to determine the overall risk of flooding at any location.
  • High-Risk Areas
    • Typically, this means that there is a 1 in 4 chance that flooding will occur during a 30-year period of time. They are shown on flood maps as A or V.
  • Moderate- to Low-Risk Areas
    • These areas have a reduced risk of flooding but not completely removed. Over 20% of NFIP claims are from these areas. Federally, flood insurance is not required in these areas but is recommended. These areas are labeled with the letters B, C, or X (or a shaded X)
  • Undetermined Flood Zones
    • These are areas that FEMA has not conducted a flood risk survey. These areas are labeled with the letter D on the flood maps. 2
Road Flooded with Double Yellow Stripe Down the Center of Image


Flood Zones 


Now that we’ve got the basics for flood zones, the areas are given additional labels by the Special Flood Hazard Area (SFHA). These labels are defined as having a 1% chance of being equaled or exceeded in any given year by flood. The 1% annual chance flood also means 100-year flood. 3


Flood Zone A Mandatory flood insurance and floodplain management standards apply
Flood Zone AE, A1-30 Mandatory flood insurance and floodplain management standards apply
Flood Zone AH Mandatory flood insurance and floodplain management standards apply
Flood Zone AO Mandatory flood insurance and floodplain management standards apply
Flood Zone AR Mandatory flood insurance and floodplain management standards apply
Flood Zone A99 Mandatory flood insurance and floodplain management standards apply
Flood Zone V Mandatory flood insurance and floodplain management standards apply
Zone X (shaded), B (moderate risk zones) The area has been determined to be outside the SFHA. There is minimal flood hazard.
Zone X (unshaded), C (low risk zones) The area has been determined to have a minimal flood hazard outside the SFHA



Now that you have all the information, how do you use it? The first step is to go to the FEMA website, Type in the address of the location in question. Use this guide to determine whether or not your location is at risk for a flood based on the map. Also consider other factors such as nearby levees that could fail or bodies of water that could present a storm surge risk. Once you’ve reviewed your exposure, or if you want more guidance reach out to Tower Street Insurance, and we can help assess your risk and provide coverage.






Reach Out to Us Today For a Free Audit of Your Business Flood Insurance!


Our passion is protecting your passion. We would love the opportunity to give you a free audit of your current business insurance, including business flood insurance. Contact our team here at Tower Street Insurance or call (469) 788-8888 today.



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