Differences in Commercial and Residential Flood Insurance

Blogs

6 min read · Feb 10, 2023

Are you a homeowner or business owner who has recently experienced flooding? Have you been researching ways to protect yourself in a future flood disaster? If so, understanding the difference between commercial and residential types of flood insurance is essential to ensure you’re adequately covered.

Commercial flood insurance is designed to provide businesses with coverage for the physical building and any inventory stored inside. On the other hand, residential flood insurance is designed to protect homeowners from damage caused by flooding, such as water seepage into walls or other structural damage to the home itself.

Coverage Provided

Commercial flood insurance covers various structures associated with businesses, including buildings owned by the company that are used solely for commercial purposes, not multi-family dwellings, and detached structures used for commercial activities, such as garages or sheds. Multiple buildings on a property will most likely require a separate policy for each building. Equipment used in conjunction with a business’s operations such as furniture or fixtures can be covered. The cover will likely include personal property such as inventory and machinery.

Residential flood insurance provides coverage for physical damage caused to the dwelling itself, including the structure of the building and all permanently attached equipment. It covers detached structures associated with the residence, such as outbuildings or garages. Personal property inside or outside the dwelling, such as furniture or appliances, can be covered. In some cases, residential flood insurance may also provide coverage for additional living expenses incurred if a resident can no longer live in a home due to damage from flooding.

Of course, you’ll want to fully review your flood insurance policy to confirm what is and is not covered.

Cost of Insurance

The cost of commercial flood insurance is typically more expensive than residential policies and depends on the size and value of the property. The cost will also depend on the property’s location, as some areas are at higher risk for flooding than others. In addition, factors such as deductible amounts, building age, construction type, and previous claims history may affect the overall price.

When it comes to residential flood insurance pricing, factors such as age and condition of the home, construction type, and location in a special flood hazard area (SFHA) can all impact the final premium rate. Additionally, the deductible for residential flood insurance must be chosen at the time of purchase.

Possible Maximum Compensation

Compensation for commercial flood insurance is typically based on the actual cash value of the property, which considers depreciation. On the other hand, residential policies offer an optional the optional coverage of replacement costs of contents.

Compensation and coverage policies vary by provider, so it is important to carefully review the policy details before purchasing any flood insurance. For instance, your home insurance most likely does not cover damage from floods, so you may consider purchasing a separate flood insurance policy.

On the other hand, the National Flood Insurance Program (NFIP) offers compensation of up to $250,000 for an entire residential property and a maximum of $100,000 for its contents. At the same time, reputable private insurance companies such as Neptune Flood offer compensation of up to $4,000,000 in property coverage and up to $500,000 for contents.

Best Commercial and Residential Flood Insurance Provider

Neptune Flood is one of the top choices if you are looking for the best commercial or residential flood insurance provider. Serving a wide area of the United States since 2018, you can enjoy many benefits with Neptune.

1. Business Interruption Coverage
In contrast to the NFIP, which does not provide this coverage, Neptune’s business interruption coverage provides you up to $25,000 or $500 for each day for up to 50 days after a 14-day waiting period.

2. Compensation for Costs of Temporary Living Expenses
Neptune will cover a portion of your temporary accommodations and meals if you are unable to reside in your home when you add this coverage.

3. Additional Structures on Property Coverage
You can expect up to $50,000 in coverage for additional detached structures on the property, like a garage, shed, or gazebo.

4. Pool Repair & Refill
Neptune provides this optional coverage for repairing or replenishing an in-ground swimming pool. In contrast to the NFIP, which does not provide this insurance.

5. Basement Coverage
Enjoy additional coverage for items in your basement. The NFIP is limited in what it covers in basements.

7 Tips Before You Buy Commercial or Residential Flood Insurance

Buying commercial or residential flood insurance is a very important decision that should not be taken lightly. Here are seven tips to consider before making such an investment:

1. Educate Yourself
Do your research and ensure you understand the different types of coverage available for commercial and residential buildings as well as the associated costs. Be aware of any discounts you can take advantage of.

2. Choose the Right Insurance Provider
Make sure to pick a provider that is reliable and offers a good level of customer service. Additionally, ensure they offer coverage for exactly what you are looking for. If you are uncertain, it’s wise to consult experts such as the Neptune Flood team or an insurance advisor.

3. Be Realistic
Only purchase coverage for the amount you realistically need. Purchasing too much coverage or inadequate coverage can result in unnecessary financial losses. A professional insurance provider can help you determine the right level of coverage.

4. Understand the Exclusions
Before making a purchase, familiarize yourself with any exclusions or limitations of the policy. This will help you avoid any unpleasant surprises downstream and ensure that you know what your policy adequately covers should disaster strike.

5. Review Your Policy Regularly
Make it a habit to review your policy every year to ensure that it continues to meet your needs and is up to date with any new developments. For instance, if your home or business has expanded or added another structure to your property, update your coverage accordingly.

6. Understand Your Premiums and Deductible
Each policy has different premiums and deductibles. Premiums are the cost of your coverage, while deductibles represent the amount you will pay out-of-pocket before the policy kicks in. Thoroughly understand both and consider if they are right for you before signing up.

7. Update Your Contact Information
Finally, ensure your contact information is always up to date. This will ensure you receive any important notifications regarding your policy and that the insurance provider can reach you in case of a claim.

Can You Purchase Commercial and Residential Flood Insurance Policies from the Same Provider?

Yes, purchasing commercial and residential flood insurance policies from the same provider is possible.

It can also make things easier when filing claims—dealing with just one insurer makes the process smoother and more efficient. However, it’s important to ensure that the coverage the provider offers meets your needs to get the best value for your money.

You should also be mindful of any policy limits and exclusions that could affect both policies. Sometimes, an insurance provider may not offer the coverage required, meaning you must shop around and work with multiple insurers. Neptune Flood can meet all your commercial and residential flood insurance needs at affordable prices.

Contact Us

Buying the right commercial or residential flood insurance policy is necessary to protect your property and financial investments during flooding. When looking for an insurance provider, there are many factors to consider, such as coverage limits, exclusions, and deductibles. Neptune Flood can be a reliable option for you if you have both commercial and residential properties. Ultimately, it’s important to know your coverage needs and the associated costs before purchasing. Doing so can help you make an informed decision knowing that you have the right protection. Contact our team at Neptune today!