When most people think of flood insurance they think of the images on the news showing the residential homes under water during Superstorms or Hurricanes, however commercial properties have just as much if not more risk to flood damage. The need for a separate insurance policy covering loss due to flood arises from the fact that flood loss is excluded from coverage under nearly all commercial property insurance forms.
Effective April 2018, ISO (Insurance Services Office) has available a commercial flood insurance product which gives property owners and agents an alternative to the NFIP (National Flood Insurance Program). NFIP is the subject of a “major showdown” in Congress as it approaches its scheduled expiration on July 31st, 2018 due to funding issues. The availability of new and improved predictive flood loss modeling information is expected to give insurers an opportunity to underwrite flood coverage profitably.
The new ISO Flood program does not have the extensive eligibility rules imposed by the NFIP product, which opens up the ability to purchase coverage to more commercial property and business owners. ISO’s program is available to most insurance companies and gives them the capacity to regulate their own eligibility criteria for various types of risks.
One of the biggest differences with the new ISO flood policy will be the 72-hour waiting period for new policies or 72-hours from the addition of a location, versus the NFIP waiting period of 30 days. Please note that even though the waiting period is 72 hours with ISO, it is unlikely that a carrier will be willing to bind any coverage if a known storm is heading your way. The new ISO policy also offers for time element losses (business interruption and extra expense).
The ISO policy is designed to be a stand-alone policy, and can be written on a primary, excess, or contributory basis. And similar to a commercial property policy, the ISO commercial flood policy is able to provide coverage for the building, business personal property, personal property of others, as well as optional coverages.
Be sure to discuss the availability of this new product with your agent before the next flood, not after. If you have any additional questions please feel free to reach out to me directly. My information is below.
Senior Account Executive
- Floods are the #1 natural disaster in the U.S.
- From 2002 to 2011, total flood insurance claims in the U.S. averaged nearly $3 billion annually.
- New Jersey is the top state in the U.S. for flood insurance claims. More than $628 million of claims payments were paid in that state in 2011 alone.
- People who live outside high-risk flood areas file more than 20% of claims and get more than 33% of disaster relief funds.
Information about the Author: Karen joined Marsh & McLennan Agency, known locally as Insurance Associates Company in 2016. She began her career in property & casualty insurance during high school in her father’s insurance agency in Maine. She later moved to Florida where she worked for 20 years at an independent insurance agency specializing in construction. Her duties included account management, risk management, client services, marketing, sales, and agency operations. Karen’s strength is in understanding the unique insurance needs and issues of the construction industry and her ability to problem solve. In her spare time she enjoys spending time with her four children and four grandchildren, camping, hiking, and going to the gym.