Flood Damaged My Business
The situation: A flood damaged my shop and inventory. My business insurer says flood isn't covered. What can I do?
Quick Answer
Most business property policies exclude flood, so the claim depends on whether you have separate flood insurance. NFIP commercial flood policies cover the building and contents, such as equipment and inventory, up to $500,000 each, less deductibles. Without one, the flood damage is generally your cost, though disaster assistance may be available after declared disasters.
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What Happened
After heavy rain, the river near Tom's hardware store rose and two feet of water filled the shop. His business owners policy excluded flood. He had NFIP commercial coverage of $250,000 for the building and $150,000 for contents. The flood policy paid for the floors, walls and electrical repairs, and for ruined inventory and shelving, less each deductible. Lost sales while closed weren't covered.
Likely Relevant Policies
- Commercial Flood Insurance
- Business Owners Policy (BOP)
Potential Coverages
NFIP commercial building coverage High likelihood
Pays for flood damage to the building, up to $500,000.
NFIP commercial contents coverage High likelihood
Pays for equipment and inventory, up to $500,000.
BOP property coverage for flood Low likelihood
Most policies exclude flood.
Possible Exclusions
- Flood is excluded from most business property policies.
- NFIP policies don't cover lost business income.
Questions That Determine Coverage
- Do you have commercial flood insurance?
- Did you buy both building and contents coverage?
- Do you own or lease the building?
- Was there a federal disaster declaration?
Recommended Immediate Actions
- Photograph water levels and damage.
- List damaged inventory with costs.
- Report to your flood insurer promptly.
- Ask about disaster assistance if a disaster is declared.
Documents to Collect
- Photos and video
- Inventory records and invoices
- Flood policy declarations
- Repair estimates
Common Claim Process
File with your flood insurer for building and contents. If you lease, the landlord's flood policy may cover the building while yours covers contents.
Potential Outcomes
- Building and contents paid up to limits, less deductibles.
- Lost income not covered by the NFIP policy.
- Without flood insurance, the owner bears the loss.
Risk Prevention Tips
- Buy contents coverage, not just building.
- Store inventory off the floor in flood-prone areas.
Frequently Asked Questions
Does business interruption cover a flood?
Not under an NFIP policy; ask about private flood coverage.
I rent my shop. Do I need flood insurance?
For your contents, yes; the landlord insures the building.
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The factual claims on this page were checked against these sources. Rules and figures change, so check the source itself if you need to confirm the current version.
- Commercial property insurance guideTexas Department of Insurance
- Buy a flood insurance policyFEMA, National Flood Insurance Program (FloodSmart)
Educational information, not advice: This scenario describes how a loss like this commonly goes, not how your claim will be decided. Coverage depends on your policy's wording, limits and deductibles, your state, and the facts. Confirm specifics with your insurer.