NFIP: Who Should Buy It?

        What You Should Know About Flood Insurance


There are two main flood hazard level standards and several sub-categories that the NFIP uses to categorize a company’s risk for flooding and to determine premiums.

     • Moderate-to-low-risk buildings, which are in zones B, C and X. These areas
     are outside of the one percent annual chance floodplain, areas of less than one
     percent annual chance of sheet-flow flooding where average depths are
     less than one foot, areas of less than one percent annual chance stream flooding
     where the contributing drainage area is less than one square mile or areas
     protected by levees.

     • High-risk buildings, which are in zones A and V.

        ◦ Zone A buildings are within a certain floodplain distance from a river,
        lake or stream.

        ◦ Zone V buildings are within a certain distance from the coast and
        exposed to natural disasters associated with the ocean.

For a complete list of sub-categories and to map out which zone your business falls in, visit, the official website of the NFIP.

If your commercial property is in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, then you are required to purchase a flood insurance policy. However, the NFIP reports that in 2008, a third of all claims paid were for policies in low-risk communities. Because new land development can increase flood risk by changing natural runoff patterns, it is a good idea to purchase flood insurance even if you are not near a large body of water.

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.