Your Business Clients Need Excess Coverage and Business Income Insurance Today (Here’s Why)

We’ve said it all before–rising costs, labor shortages, and other factors have created a “perfect storm,” driving up rebuilding expenses after flood damage. In fact, estimated flood losses for the 2024 storm season – just for the National Flood Insurance Program (NFIP) – exceed $10 billion.

Here’s the problem with such astronomically high figures: Flood insurance is required by lenders for properties in designated flood zones, but most lenders only mandate coverage up to the NFIP maximum limits of $500,000 for building coverage and $500,000 for contents. Unfortunately, these mandated limits may fall significantly short of what’s needed to fully recover. Property and business owners relying solely on this coverage often face unexpected and substantial financial gaps as rebuilding costs far exceed these caps.

Your Insureds Need Excess Coverage and Business Income Insurance (Right Now)

Excess Coverage is designed to extend the limits beyond the NFIP’s $500,000 cap for building and contents, ensuring that businesses with high-value properties or equipment are not left underinsured. Meanwhile, Business Income insurance provides critical support for lost income and ongoing expenses if a business is forced to shut down temporarily due to flood damage. 

Together, these options from the private insurance market can offer a much higher level of financial security, far surpassing what the NFIP alone can provide.

Here’s How Excess and Business Income Coverage Keep Businesses From Closing After Major Flooding Events:

1. Risk Management: Private insurance options like Excess Coverage and Business Income provide a level of customization not available through the NFIP. These policies can be tailored to meet the specific needs of a business, accounting for unique risks, property values, and operational requirements. 
2. Income Protection During Downtime: Flood damage can disrupt operations for weeks or even months. Business Income insurance helps cover lost revenue during this period, ensuring the business can continue to meet its financial obligations and avoid permanent closure. Business Income insurance is vital for maintaining cash flow until normal operations resume.
3. Support for Fixed Expenses: Even if operations are paused, businesses still face ongoing expenses like rent, utilities, and payroll. Business Income insurance provides funds to help cover these fixed costs.
4. Faster Recovery and Reopening: When expenses exceed the $500,000 cap, Excess Coverage reduces the financial strain of repairs and replacements, allowing businesses to recover and reopen more quickly. This access to additional necessary funds can significantly shorten downtime and minimize long-term financial impacts.
5. Resilience Against Future Risks: With Excess Coverage and Business Income, businesses can proactively prepare for future flood events by adjusting coverage levels and terms to reflect evolving risks. This customization not only ensures protection against today’s threats but also builds long-term resilience against the increasing frequency and severity of flooding due to climate change.

Here's an important point that agents and business owners should keep in mind: Many are unaware of how—and when—Excess Coverage and Business Income insurance come into play. While most policies require for Excess Coverage to be triggered before Business Income insurance can be used, AFR Insurance Services has created policies that can be triggered independently. With AFR, even if Excess Coverage isn’t activated, Business Income insurance can often still be utilized after just fourteen days of closure. 

Insurance agents gain a competitive advantage by partnering with AFR Insurance Services

At AFR Insurance Services, we’ve been in the flood business for over 30 years, writing more than 15,000 policies, including complex risks such as multi-structure portfolios across different states, all on a single policy. We know the ins and outs of commercial flood insurance. More importantly, we work with a wide network of underwriters to get agents and their insureds the coverage they need to be protected from increasingly costly and frequent floods.

Let AFR Insurance Services quote your next commercial property for flood insurance. Discover how we can offer superior coverage for your clients at competitive prices.

Just click the button below, and if you don’t have a commercial property that needs a quote immediately, bookmark the link and come back when you do.