Blog: Protection against floods requires additional coverage

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The images of water rushing through the streets of Manitou Springs yesterday should act as a reminder that floods are the most common natural disaster in the U.S.

Yet, most insurance policies — both commercial and residential — don’t automatically protect against floodwaters.

Under the National Flood Insurance Program, commercial flood insurance policies are available for purchase, which insure losses up to $500,000 for a building and up to $500,000 for its contents.

The Federal Emergency Management Agency manages the program available nationwide through insurance agents in more 22,000 communities.

“Some commercial insurance policies include flooding as a covered peril,” the FEMA website states. “However, many do not, and those that do often have a high deductible. The deductible can be as much as the NFIP’s $500,000 maximum coverage. For this reason, an NFIP flood insurance policy makes sense either as stand-alone coverage or in combination with other flood coverage.”

About 25 percent of businesses that close after a devastating event, such as a flood, never reopen, according to the Insurance Institute for Business and Home Safety. Meanwhile, there is a 30-day waiting period for NFIP flood insurance policies to go into effect.

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Additionally, the program, which requires periodical renewal by Congress to operate, might lapse if the government body doesn’t again reauthorize it by the end of next Tuesday.

“In the unlikely event the NFIP’s authorization lapses, FEMA would still have authority to ensure the payment of valid claims with available funds,” the federal agency’s website states. “However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation.”

In March, President Donald Trump signed legislation extending the program’s authorization to July 31.

“NFIP reauthorization is an opportunity for Congress to take bold steps to reduce the complexity of the program while transitioning it to a sounder financial framework,” the FEMA website states. “The level of damage from the 2017 hurricanes makes it abundantly clear that FEMA needs a holistic plan to ready the nation for managing the cost of catastrophic flooding under the NFIP.”

Needless to say, now might be the time to buy a flood insurance policy if your home or business isn’t already covered.

Visit floodsmart.gov to learn more about the NFIP, including commercial rates and coverage.