Flood could ruin 1 in 4 small businesses
Last Updated: 16:59 September 13, 2013
Walker, executive director of the Rocky Mountain Insurance Information Association, said as many as one in four small businesses, however, might have to shut their doors after such a disaster because they don't have the insurance to cover their losses or the capital to pay for damages themselves.
Walker said there are several mistakes small-business owners can make when it comes to flood insurance. Sometimes, they might have insurance on their building but not the contents, leaving their inventory destroyed with no coverage. They also might not realize they need flood insurance or think they're in an area where they don't need it. Or they simply might forego extras like flood insurance to make ends meet.
"It's last on their lists after computer equipment and other things," Walker said Friday.
More than a foot of rain fell on much of Boulder County in recent days, devastating parts of Boulder, Lyons, Longmont and other local communities. For businesses and homeowners alike, floods can cause particular heartache.
When the Fourmile Fire burned scores of Boulder County homes three years ago, the upside is that most affected residents were covered by insurance. That's not the case with flooding, which isn't a peril covered under most homeowner policies like fires and tornadoes.
Flood insurance must be purchased separately, and it is supplied mostly through the federal National Flood Insurance Program. Few people carry it.
"I know we can't predict it," said Marguerite Salazar, commissioner of the division of insurance for the Colorado Department of Regulatory Agencies. "But I think there's a lot of surprise when people look at their policy and realize they don't have flood insurance."
This week's flooding stretched all the way from Larimer County to the north to Aurora and other parts of the Denver metro area and even parts of the Colorado Springs area to the south. Salazar said her agency would try to use this week's disaster as an opportunity to encourage homeowners and businesses to sit down with their insurance agents, go over their policies and make sure everything they want covered is covered.
Joe Chrisman, a State Farm agent in Boulder, said Boulder has a relatively high number of households that carry flood insurance, though it is still a small percentage of households in town overall. Even as floodwaters raged out of mountain canyons into the flatlands and rain continued to flood saturated lowlands Friday morning, Chrisman said he was already receiving calls from customers who maybe hadn't suffered damage from the flooding but thought it might be a good time to buy a flood policy.
"Flooding doesn't just happen in defined flood zones as we're finding out currently," said Chrisman, whose own downtown Boulder office saw floodwaters come within a couple of feet of the front door Friday morning.
For those thinking of buying a flood policy now, Chrisman said they should know that it won't cover them for this event even if they haven't sustained damage yet. There's a 30-day waiting period before flood policies go into effect to protect the NFIP from agents selling a pile of policies right before a forecasted storm hits.
For those who suffer flood damage who don't have coverage, they're often left to foot the entire costs of damage themselves. However, Walker said there could eventually be some federal assistance granted to uninsured or underinsured Coloradans in the wake of this week's floods to help with recovery. The emergency assistance that President Barack Obama approved Thursday night covers only ongoing life saving and sustaining efforts.
"The wake-up call really is flood insurance is a better way to go," Walker said. "Federal disaster assistance is limited in scope."
Salazar said homeowners and businesses should assess their damage. While flood damage won't be covered without a flood policy, damage to roofs and other parts of their buildings as a result of the sustained rainfall could well be covered under their normal insurance plans.
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