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Flooding in Memphis is a risk to any business, whether you are landlocked or near water. In fact, in the past five years all 50 states have experienced floods, and at least one in four businesses that shuts down from a natural disaster never reopens. According to the U.S. government, the average commercial flood claim in the past five years has been around $89,000, and the average property damage due to flooding adds up to more than $3.5 billion annually.
A general policy will not cover flood damage, and Memphis commercial flood insurance is only available through the National Flood Insurance Program (NFIP). The NFIP will cover all the types of floods discussed above, including mudslides, though it is important to note that it does not cover landslides even if they are caused by heavy rain. To make sure you get a fair price, every Memphis commercial flood agent answers to this government agency; therefore, Memphis flood insurance is backed by the government but sold through private insurers.
There are plenty of misunderstandings about Memphis flood insurance. At Lofton Wells Insurance Agency, we have compiled some information about the NFIP and its coverage to help you understand its benefits.
There are two main flood hazard level standards and several sub-categories that the NFIP uses to categorize a company’s risk for flooding in Memphis and to determine premiums.
For a complete list of sub-categories and to map out which zone your Memphis business falls in, visit www.floodsmart.gov, the official website of the NFIP.
If your Memphis 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 Memphis flood insurance policy. However, the NFIP reports that one-third of all annual claims paid are for policies in low-risk communities. Because new land development can increase Memphis flood risk by changing natural runoff patterns, it is a good idea to purchase Memphis flood insurance even if you are not near a large body of water.
Memphis flood insurance premiums are based on several factors, which could raise or lower the amount your company would have to pay. These factors include the following:
If you are located in a low-risk area in Memphis, you are eligible for the Preferred Risk Policy, which would cover your building as well as its contents for just a few hundred dollars a year. 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 could cost your company less than $100 per month.
There are two types of Memphis commercial building flood insurance coverage, and you can opt to buy one or both.
In addition to these two types of building coverage, the NFIP will also cover debris removal during the cleanup process. Also, if your Memphis business takes steps to protect against or prevent flood damage, you may be eligible for lower rates. For more information on how to protect against the risk of flood damage to your Memphis business, go to www.fema.gov/information-property-owners.