In the aftermath of Hurricane Florence, flood insurance, or the lack of it, has become a major talking point. This is because we are finding that the majority of the residual damage from the storm was caused by extreme flooding. Although the discussion of flood insurance is primarily focused on the impact of homes and homeowners, many of the same concerns apply to commercial properties and property owners.
How do I find out the flood risk of My property?
The first step to determining your flood risk is to determine where the property is located on a Federal Emergency Management Agency (FEMA) flood zone map. FEMA has developed flood zone maps as part of the National Flood Insurance Program (NFIP) to detail geographic areas with flood zone classifications. The Flood Insurance Rate Map (FIRM) is the most common map found in most communities and is often incorporated into local GIS mapping services. Flood hazard areas identified on the FIRM are identified as a Special Flood Hazard Area (SFHA). SFHA are defined as areas that have a 1% or greater chance of a flood event in any given year. This is often referred as a 100 year flood zone. The FIRM also identifies moderate flood areas which would be subject to a 0.2% to 1% chance of flood in any given year, or a 500 year flood zone.
There are a few quick ways to check if your property is in a hazard area. You can use the address search function at www.floodsmart.gov or www.msc.fema.gov, or you can check your local county GIS service for flood zone map overlays. All of these will be able to show you what zone your property is in.
my property is in a risk zone... now what?
In addition to your zone, there are several factors are used to determine the flood risk exposure. Before you engage with an insurance broker or agent, you will need to know property information such as the type and size of the building, the number of floors, whether there is a basement or crawlspace, the elevation of lowest floor, and the geographic location. Be prepared, you might also need an Elevation Certificate (EC). This certificate verifies your building’s elevation compared to the estimated height floodwaters will reach in a major flood in a high-risk flood area. Counties that participate in the Community Rating System (CRS) may already have a copy of your EC on file. If a EC is not on file, you can get a surveyor to create an EC for you.
Once you have all the necessary information, an insurance agent or broker will be able to obtain quotes for your property's necessary coverage.
Property Financing & Flood Insurance
If your property is mortgaged with a lender and is located within a flood hazard area, it is extremely likely that flood insurance must be maintained on the property while it is financed. Non-financed property is still eligible to participate in the NFIP provided it is located in a Hazard Zone. Through the NFIP, commercial real estate coverage may be purchased on buildings up to a maximum limit of $500,000. This program also allows you to insure your property's contents up to a maximum limit of $500,000 with various deductible options. Commercial insurers provide limited flood insurance either as excess above NFIP limits or as sublimits or deductible programs within larger risk management programs. You can read more about what your quote means and what is covered here.
The best piece of advice on flood insurance is to talk to your insurance provider well in advance of any potential issues!
The material provided above is for informational purposes only and not for the purpose of providing insurance or legal advice. For your convenience, we have provides references to web sites maintained by unaffiliated third parties. While we try to reference sites that we believe are of high quality, Linville Team Partners does not recommend or endorse third party sites and cannot be responsible for the information, services or products offered on those sites.