Categorized | Insurance

Flash Flood, a Weather-Related Killer

What do you think of when you hear the word “flood?” The Mississippi River overflowing its banks? Waves from the Atlantic Ocean pushed inland by Hurricane Sandy? True, many floods result from the overflow of a body of water. However, flash floods can occur anywhere, even in a desert. I have not experienced a flash flood personally but one has occurred everywhere I have lived.

Flood Stream

To qualify as a flash flood, a flooding event must take place in less than six hours. A flash flood may occur when rainwater collects in a low-lying area. Alternatively, it may occur because a dam, levy or other man-made structure has collapsed. A flash flood is particularly dangerous because it can happen without warning. Heavy rain, inadequate storm drains, compacted soil and concrete surfaces can be contributing factors to a flash flood. A flood can form amazingly fast. See for yourself by watching this video on YouTube. It’s no wonder that flash floods are the primary weather related killer in the United States!

Suppose a flash flood damages your company’s property. Will your insurance cover the loss? The answer depends on the type of property that is damaged. If autos your company owns have suffered flood damage, the loss should be covered if you have purchased comprehensive coverage under your commercial auto policy. However, most commercial property policies contain a broad “water” exclusion that applies to flood, including flash flood. If you want to protect buildings and personal property against floods of any kind, you need to purchase flood insurance.

Small businesses can buy flood insurance through a federal program called the National Flood Insurance Program (NFIP). Business-owned property is insured under a commercial flood policy form called the General Property Policy Form. You can purchase a policy from an agent affiliated with the flood program. To help you find an agent FEMA offers an agent locator on its website.

The national flood program has been criticized for being underfunded. One reason for its lack of funds is subsidized rates. Since its inception in 1968 the NFIP has charged some property owners less than full actuarial rates. Subsidized rates are being eliminated under a law passed in 2012 called the Flood Insurance Reform Act . Only about 20% of property owners covered by flood insurance pay subsidized rates. Thus, FEMA says that most property owners should not be hit with a large rate increase. I’m sure some policyholders will disagree with this assertion.

Finally, don’t miss my latest articles on Certificates of Liability Insurance and Additional Insured Endorsements. These topics are related since a company that requires an insurance certificate say, from a contractor or tenant, often demands coverage under an additional insured endorsement.

Image Courtesy of [Maggie Smith] /

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