Commercial Consequences: Water Vs. Flood Damage

When disaster strikes, your business can suffer immense financial loss in property damage, damaged products, and lost income. When it comes to flooding and water damage, there can be a lot of confusion with what a Businesses Owner’s Policy (BOP) covers since flooding is covered by a completely different policy. The best way to learn the difference is to go over both types of coverage and explain exactly what each policy covers. Not having the right coverage can have severe consequences on your business, so contact H&K Insurance to make sure your business is properly protected from water and flood damage.

Water Damage Vs. Flood Damage: The Differences

When it comes to your business’s property, the difference between “water damage” and “flood damage” can be the difference between having coverage and having hundreds of thousands of dollars in lost stock, damaged equipment, and building restoration that you have to pay out of pocket. Generally speaking, it’s the source and amount of the water that defines the coverage:

• Surface, inland, tidal, mud flow waters that accumulate and overflow rapidly and unusually are considered flooding (see Protecting Against Flooding below for more details).
• Likewise – except for erosion – structural or mechanical failure means it’s water damage. This could be a broken pipe, overflowing sink, or a leaking roof.

Because flood insurance is not included in most commercial insurance policies, making sure you are covered can save your business thousands of dollars. Since water damage coming from a burst pipe or leaking faucet can be more likely than a flood, many BOP’s already include certain types of water damage coverage. It is important that you go over your BOP to find out how you are covered and to add flood insurance if you are at risk in any way.

Example of Commercial Water Damage Hazards

Disasters can happen in any business­­—being prepared and knowing different types of water damage hazards can help you better protect your business from suffering any unnecessary losses. Here are a few examples of what to be aware of when it comes to water damage:

• Boiler and Machinery Risk: A bursting boiler can cause extensive damage to equipment inventory. Proper maintenance on your boiler and machinery can save you from ever having to make a water damage claim on your property. Your BOP may also provide coverage.
• Structural Damage: Something as small as a gradual leak from a sink or toilet can cause severe water damage that can lead to heavy structural damage to your business. Watch out for water stains or a musty smell and act quickly to prevent any structural damage.
• Mold Growth: Mold can grow wherever there is moisture and can cause a variety of health issues for your business.

Protecting Against Flooding

According to the Federal Emergency Management Agency (FEMA), a flood is defined as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties that occur from:

• Mudflow or landslides.
• Overflow of inland or tidal waves.
• Unusual and rapid accumulation from an outside source.
• Runoff of surface water from any source.

Whether or not your business is in a flood zone, it is wise to protect your business from the high losses that overflows or floods can cause. But what is the best way to prepare for these events?

Preparing for Disasters

One of the best ways to prepare for a disaster or emergency is to assign a management team in your business and to practice different scenarios. This will allow your business to expect the unexpected and to be ready for action if a hurricane or heavy rainstorm threatens your building.

Getting the Right Coverage

We hope this blog was beneficial in explaining commercial consequences of flood and water damage. At H&K Insurance, our goal is to protect as many businesses as we can. Contact us today to learn more about flood and water damage claims and how the right plan can save you thousands of dollars.