Essential Flood Damage Coverages for Hospitals and Outpatient Health Care Facilities

Flooding can affect a single building or shut down whole communities, wreaking havoc through water damage, contamination, and ruined foundations. Medical centers are uniquely at risk in these disasters, since shutting their doors may force administrators to relocate their current patients and turn away those who require care. Whether your hospital is run by a board of governors or a solo practitioner, attorney Bill Voss explores common problems you may experience when making a commercial flood damage claim for your medical facility.

You Need More Than a BOP to Cover Flood Damage Costs

While a strong business owners policy (BOP) can be invaluable in some events, many private insurers will only cover certain kinds of water damage, such as damage from a roof leak or a burst pipe. Owners whose losses were caused by a storm surge or a natural disaster may find themselves paying out of pocket for their losses, or even declaring bankruptcy due to an inability to perform repairs.

In order to fully protect your enterprise from flooding, you should purchase coverage for your healthcare center under the National Flood Insurance Program (NFIP). These policies specifically cover flooding caused by an extreme weather event, such as a hurricane or rising tides.

Once you have secured an NFIP policy, you may want to consider special policy endorsements that can offer further protection from a flood, such as:

• Building ordinance coverage. Once a building has suffered damage, the structure must be updated to maintain compliance with current building codes. Building ordinance insurance can pay to upgrade older structures, including the costs of installing ramps and elevators for patients in wheelchairs.
• Business vehicle coverage. If you rely on your own ambulances, patient or employee shuttles, delivery vans, or other business vehicles, these must be protected from both destruction and liability. A comprehensive commercial auto policy will cover non-collision losses, such as water damage to parked vehicles or windshield repair from fallen tree limbs.
• Special equipment coverage. The loss of one or more pieces of technical equipment could put you over your policy limit; you may want to consider covering certain items under a separate deductible. Your insurer may offer an endorsement for specialized medical equipment, such as diagnostic testing machines, patient beds, and other expensive items vital to your daily operation.
• Spoliation and service interruptions. Flooding may knock out power, wireless internet, municipal water, and waste disposal services, leading to loss of perishable items and increasing biohazardous waste. Utility and spoliation coverage can replace industrial items in industrial refrigerators and freezers ranging from food and drinks to blood bags and human organs.
• Rental coverage. If your facility leases its x-ray machines, dentist chairs, or other medical equipment from a vendor or hospital, any equipment not directly owned by the facility should be protected under a rental insurance policy. 
• Inland marine insurance. This coverage, sometimes called transportation and cargo insurance, can pay to replace any goods or inventory that has been lost on its way to or from your facility. This could be medical supplies, custom prosthetics, or other items washed away by floodwaters or otherwise lost in transit.
• Business interruption insurance. Business interruption insurance is hands-down the most important form of commercial property damage insurance. Every day your doors are closed to the public, you lose thousands of dollars in business income—and if you have an entire community of hospitals, you could lose millions. Business interruption insurance can replace your lost income while you are performing cleanup and making repairs, including payroll expenses, projected income from canceled procedures, and out-of-pocket costs.

Unfortunately, insurers often attempt to deny flood damage coverage by claiming that the event was an act of God or otherwise excluded from coverage. When this happens, a commercial insurance attorney can help you get fair payment for your losses. Simply fill out the form on this page today to contact an insurance attorney at the Voss Law Firm or order a free copy of our book, Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.