Flooding can interrupt the lives of everyone in a community, ruining homes and businesses across multiple counties. A hurricane or storm surge can affect everything from the structure of a sporting arena to thousands of dollars lost in ticket sales until the damage can be repaired. Attorney Bill Voss examines how different types of water damage are compensated by insurers and the optional endorsements that can strengthen a flood damage policy.
Who Pays for Flood Damage to a Stadium or Sports Arena?
The answer to this question depends on the nature of the water damage and the source of the flooding. Flooding caused by a natural disaster, such as rising tidal waters or a tropical storm, is typically not covered under commercial insurance policies. Business owners will have to secure a separate property damage policy through the National Flood Insurance Program (NFIP) to protect stadiums and arenas in flood-prone areas.
On the other hand, commercial insurers may cover flood losses caused by something other than a natural disaster. This can be weather-related flooding (such as rain damage from a leak in the roof), municipal flooding (such as water or sewer backup), or mechanical failure (such as a burst pipe or malfunctioning sprinkler systems).
Depending on the options you have selected, your commercial insurer may pay for water damage to:
- High-value equipment. Water and electronics do not mix, and flooding can damage scoreboards, digital billboards, lighting equipment, and cameras used in game play. Flood damage to security cameras, card readers, and electronic gates can cause malfunctions that lead to looting and vandalism while the property is under repair. An extra equipment endorsement can allow additional payment to replace expensive or specialized equipment.
- Grounds and landscaping. Flooding can ruin the property you have worked hard to beautify, drowning millions of dollars’ worth of flowers, trees, shrubs, and plants. It can also mean the loss of any outdoor elements that attract visitors, such as fountains, statues, parks, and other features. If you have extensive grounds attached to your property, you may need a coverage endorsement to replace landscaping losses.
- Playing surfaces. Flooding inside a structure can ruin all manner of playing surfaces, from standardized baseball and football fields and running tracks to ice rinks and basketball courts. All playing surfaces will have to be restored in compliance with sporting regulations and industry standards to ensure the integrity of the games played at your venue.
- Company vehicles. If you have a fleet of shuttles, buses, or company cars that are stored on the property, you may want to invest in comprehensive auto insurance to ensure the repair or replacement of your vehicles after a flood.
- Ancillary properties. If your arena has its own parking garage, team recovery facilities, training areas, restaurants, hall of fame, event venue, or shopping outlet, you may need to purchase additional coverage for each structure, or secure a policy endorsement for additional holdings on the property.
- New and improved facilities. Any damage to your property will have to be rebuilt in a way that is compliant with current building codes. If your bleachers, field, or arena was built over 10 years ago, the capital needed to comply with improved building ordinances could double your costs of construction. Code upgrade coverage can reimburse the cost of refurbishment and installation of new utilities mandated by building ordinances. In addition, builder’s risk coverage can cover any portion of your arena that is undergoing construction or expansion until is it fully covered under its own property damage policy.
- Canceled games and events. Foundation and grounds damage due to flooding can keep your doors closed for months, robbing you of the ability to host your regular games and annual tournaments. Seasonal insurance can replace business income lost during the regular season if teams are forced to play at alternate venues, while special events coverage can replace lost revenue from fundraisers, sports days, graduations, private parties, championship games, or other major events hosted at your arena.
- Lost income. Business income (or business interruption) insurance is arguably the most valuable form of commercial insurance, as it provides payment for up to six months of lost profits after an adverse event.
If you are having trouble getting the insurance coverage you paid for after a flood, the Voss Law Firm can help. Simply fill out the form on this page to get your questions answered by an insurance attorney, or learn more about filing a claim in our book, Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.