Business Owners Policies and most property policies do not cover losses from certain natural and manmade hazards.

These include:

  • Earthquake (and other ground movement)
  • Flood
  • Wind damage from hurricanes
  • Loss of utilities
  • Earthquake Insurance—About 90% of Americans live in an area at risk from earthquakes. The likelihood of your business being damaged by an earthquake depends on two things: your seismic hazard zone and the construction of your building.

    • Earthquake insurance typically covers structural repairs and damage to other property, as well as for the removal of debris. It may cover the increased costs of bringing your building into compliance with earthquake codes. It may also pay for temporary relocation while your building is being repaired (Go to www.naic.org/documents/consumer_guide_earthquake.pdf for more information).

  • Flood Insurance—Flood insurance through the National Flood Insurance Program covers losses from flooding, regardless of whether or not you are in the floodplain, and regardless of the source of the flooding (stormwater, body of water, broken water main, etc.). However, the water must be from an overland flood—not from a basement drain—and not solely contained to your property. Back up from drains and sewers can be covered by the property section of your BOP or Commercial Package. Check your policy to make sure you’re covered (Visit Floodsmart.gov for more information).

    • Note: The National Flood Insurance Agency does not provide coverage for Business Income or Business Interruption. Unfortunately, because flooding is excluded on the BOP or Commercial Package, there would be no coverage from that policy either.

  • Hurricane Insurance—Hurricane damage comes from wind and water. Coverage for flooding caused by hurricanes is covered by the National Flood Insurance Program (see above). The wind coverage should be provided by your property policy. If you live in a coastal area, your wind coverage may have a second deductible that is different than the deductible for other damage. Hurricane wind deductibles are generally not set as a dollar amount, but as a percentage of the damage (typically 3 to 5%). In some areas, dollar amount deductibles are available, if you agree to a higher premium.

  • Loss of Utilities—In 2008, changes in the insurance industry led to the exclusion of losses caused by utility failure from most policies. Utility Service insurance is still available, but it must be purchased as a separate endorsement. Coverage typically includes the interruption of water, power, and communications services (including internet and cell service). Policies typically exclude power surges and may exclude some failures that result from on-premises equipment. (Power surges are considered “sudden and accidental damage from artificially generated electrical current.” Check with your insurance agent to see if your property policy covers those losses.)

Reimbursement for some disaster losses may be available after an event through a Presidential Disaster Declaration. Not every event receives a Presidential Disaster Declaration, and not every Presidential Disaster Declaration results in assistance for damaged homes and businesses. In some cases, low-interest loans may be available through the Small Business Administration or other federal agencies. Adequate insurance coverage is your best bet for getting back in business quickly after a disaster.