Flood waters can wreak havoc on construction projects, and the impact on property owners and contractors alike can be financially crippling. When the affected area has dried, ruined materials should be disposed of and replaced. The time and cost of these cleanup and replacement delays can be significant. Adding insult to injury, time delays also cut into profits for commercial businesses and add extra frustration and cost.
According to National Flood Insurance Program (NFIP) data ranging from 2011-2015, the average flood insurance claim is nearly $43,000 for residential properties and nearly $90,000 for commercial properties.
And that expense isn’t limited just to individuals and businesses within flood zones. In fact, people outside of mapped high-risk flood areas file over 20 percent of all NFIP flood insurance claims and receive one-third of Federal Disaster Assistance for flooding. While flood coverage can be available for residential and commercial new construction, remodeling and installation projects, the location of the project is the deciding factor. The Federal Emergency Management Agency (FEMA) determines which geographic areas fall under the category of critical flood zones. Need for flood insurance and availability of coverage varies on a case-by-case basis, per flood zones and project needs.
Neither you nor your clients can prevent a flood from occurring, of course, but measures can be taken to limit potential physical and financial damage from flood waters. Examples include placing portable barriers (e.g. flood walls or gates at the construction site) and making sure that electrical and mechanical equipment is placed above projected surge heights.
For insurance agents serving builders risk clients, the question should be: If flood coverage is available but isn’t purchased, are clients personally prepared to bear the risk of loss from damaging floodwaters? Builders risk insurance coverage forms typically exclude flood damage. However, in many locations, coverage for flood exposure is available and can be added to builders risk policies through a policy endorsement. Clients are also often surprised to learn that purchasing an endorsement for flood coverage on a builders risk policy is often less expensive than purchasing separate flood insurance through the National Flood Insurance Program (NFIP).
Even clients whose projects are not physically located in designated high-risk flood zones should be encouraged to add flood protection to their builders risk policies. After all, excessive rainfall can result in flooding almost everywhere.
Choosing flood protection is a smart move for any commercial or residential builders risk client. Natural disasters and weather events are generally unpredictable, but being prepared is crucial. Fortunately, builders risk policies can be customized so clients can manage whatever Mother Nature throws their way.
Want to learn more about helping clients mitigate water intrusion and the financial impact that accompanies it? Download this Zurich risk mitigation report, Reducing Water Damage During Construction, today.
This is intended as a general description of certain types of insurance and services available to qualified customers. Your policy is the contract that specifically and fully describes your coverage. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy.