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Ask the Experts: Flood coverage

How much Flood coverage does the Pool provide?

Floods can devastate the real and financial wellbeing of a community. That is why Congress created the National Flood Insurance Program (NFIP). Despite their best intentions, the NFIP can be costly and full of gaps. The NFIP provides up to $500,000 each for commercial buildings and personal property.

For districts with large facilities, this wouldn’t be enough. It also doesn’t cover items outside of a building. This could include plant life, wells, septic systems, decks, patios, fences, and swimming pools.1 The NFIP even excludes lost income, payroll, and other ongoing expenses.

The most at-risk areas are in A zones, known as the 100-year flood. These have a 1% chance of flooding every year. The moderate risk areas, B and X zones, are 500-year flood zones because they have a 0.2% chance of flooding. About 10% of the locations covered by the Pool are in an A or B zone.

September of 2013 was the most significant flood the Pool has experienced. To date, we have paid out over $1.2 million to members that suffered a loss. Despite that, members suffered over $200,000,000 in uninsured damage.

Unlike outside flood programs, ours is automatic for all scheduled property. We cover your assets for up to $2,000,000. For some, this limit may cover the repair of their facilities. For others, it may be insufficient. Limits up to $10,000,000 are available! Flood damage can occur over a broad area in a single event. Districts with multiple locations should take a look at their situation. Unexpected costs such as emergency overtime could exceed the $2,000,000 limit.

With serious incidents, you must consider the financial impact. This could include costs for temporary workspace. We provide a limit of $250,000 for costs like these but higher limits are available. These expenses fall under Business Income and Extra Expense coverages. Consider these questions:

Business Income

  • Do you have enough funds to continue to pay bills while unable to conduct business?
  • Will you lose revenue from rents or fees?
  • How will your normal sales operations be affected?
  • Will you continue to pay your employees while they are unable to work?

Extra Expense

  • Where will you conduct business while unable to access your building?
  • How will employees answer calls and requests from your customers?
  • How will you let the residents and businesses in your area know that your services have been interrupted?
  • Do you need temporary computers, vehicles or other equipment?

Nearly three hundred members have property valued over $2,000,000. Only 14 of them have increased Flood limits and 33 have an increased Business Income limit.

Just because something is unlikely, doesn’t mean it is impossible. The districts that lost widespread property in 2013 can assure you of that. It’s best to prepare for whatever might take place. That once in a hundred-year flood could happen on your watch. If you would like information on higher limits, contact your broker or email us at csdpool@mcgriff.com.

Source:
1.  https://www.fema.gov/media-library-data/6a2ad0291e8d6a5452aa891a6c037039/fema_Summary_508C.pdf

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