NFIP: Associated Costs

        What You Should Know About Flood Insurance


Flood insurance premiums are based on several factors, which could raise or lower the amount your company would have to pay. These factors include:

     • Building’s age, height and occupancy.

     • Your company’s location within the building.

     • The location of the lowest floor in relation to the elevation requirement
     on the flood map (only applicable to newer buildings).

     • The deductible you choose and the amount of building and contents coverage.

If you are located in a low-risk area, you are eligible for the Preferred Risk Policy and your premiums could be as low as $119 per year, which would include coverage for your building as well as its contents. Even though federal disaster assistance is available to flood victims, it is usually in the form of a loan that must be paid back with interest. For example, if you received a $50,000 federal loan at 4 percent interest, your monthly payment would be around $240; however, by comparison, a $100,000 flood insurance premium would cost your company only around $33 per month.

Flooding is a risk to any business, whether you are inland or near the coastline. In fact, one in four businesses that shuts down from a natural disaster never reopens, and more than 80 percent of all presidentially declared natural disasters involve flooding. According to the U.S. government, the average commercial flood claim in the past 10 years has been around $33,000, and property damage due to flooding usually adds up to more than $6 billion annually.