Risk Management: Flood Insurance (Location, Location, Location)

The infamous quote, “Location, location, location,” from William Dillard, founder of the Dillard’s chain of department stores, applies to many aspects of business. For insurance purposes, one of the biggest things it applies to is flooding—especially during the spring.

Flooding, by definition, refers to water pouring over dry land that is unable to absorb it. It can be caused by melted snow, spring showers, heavy rains, drainage malfunctions, inadequate dams or, most obviously, tropical storms. The most common sites for floods are flat, low areas, but claims history shows that flooding can happen anywhere—and usually there is little to no warning before it occurs. I know this sounds ridiculous, but dry states also have flooding issues. Take Phoenix, for example. In July and August, the city and its surrounding areas are pelted with monsoons—fast-acting summer storms known to cause flash flooding in a matter of minutes.

Beyond the harm of the water itself, flood damage is often the result of mud, earth and surrounding debris being uprooted and destroying anything in their path. Because of this, salons located in high-risk flood zones should watch the weather frequently and create safety procedures to follow in the event of an emergency. Before anything ever happens, be sure to document the interior and exterior structure of your salon and the contents inside with photographs.

That said, be aware that flooding is excluded from most commercial policies—many times, salon owners don’t realize this fact until they try to file a claim. Check your policy now to see if flood coverage is excluded. If so, you don’t need to stress; the National Flood Insurance Program is an easy and inexpensive way to protect your business, and it can provide you with detailed information regarding flooding in your area. This is a great, one-step solution to protect your business in the event of a flood.

Prior to the 1960s, businesses hit by a flood only could get assistance from the community or from charitable contributions—many business owners lost everything. The government did try to help, but the assistance varied by location and was very expensive. Then the National Flood Insurance Program stepped in.

This program, coupled with its servicing company, Write Your Own, actually guarantees coverage for anyone, regardless of location. Different programs are available for those in lower-risk areas—including options for a special low-cost preferred-risk policy—because location does affect the premium and will determine the type of flood insurance you need. However, this insurance policy is affordable even if you own a salon in what is considered a high-risk area; on average, this coverage costs just a few hundred dollars per year.

Contact your insurance agent to find out more. Flood insurance can be purchased at any time, but keep in mind that there is a 30-day waiting period from the date of your application until coverage goes into effect. Don’t think that flooding won’t happen to you or, worst yet, assume you have coverage under your commercial policy and find out that flooding is excluded after you’ve experienced a flood.

For more information or to get a quick, no-obligation quote, call (800) 844-2101 or visit www.universalinsuranceltd.com.