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Understanding the Difference Between Water Damage and Flood Damage in Insurance Claims

Hole in the Roof of a Rental Building From Storm DamageFlooding can cause extensive damage both inside and outside a commercial property, costing millions in structural damage, lost products and inventory, and lost income due to extended closures. Unfortunately, insurers may dispute whether your losses are covered depending on the source of the flooding. Attorney Bill Voss offers steps to take to protect against all types of water damage as well as how to tell which policy will cover the loss.

Water Damage vs Flood Damage from an Insurer’s Point of View

Commercial insurers are well aware of the damage that water can cause to electrical systems, roofs and basements, and all items contained in a flooded area. As a result, most insurance companies take great care to describe which water-related losses they will and will not cover. In general, the difference between “water damage” and “flood damage” will depend on the source and amount of the water that has affected the insured property.

What Is Water Damage?

Water damage is often covered under a commercial businesses owner’s policy (BOP) if it is caused by structural or mechanical failure. While some natural causes may be covered by commercial water damage insurance, most large-scale natural disasters will not.

Causes of water damage compensable by BOPs may include:

  • A pipe bursts, flooding several units in an apartment complex
  • A backroom sink overflows, ruining boxes of inventory stacked nearby
  • Water intrusion from a leaking roof causes wood rot and mold growth in the walls

What Is Flood Damage?

The Federal Emergency Management Agency (FEMA) defines a flood as any event that results in “partial or complete inundation of two or more acres of normally dry land area or of two or more properties.” Flooding may be caused by severe weather events, or by gradually rising waters that overflow suddenly. While commercial insurers will typically not cover these losses, a business can protect against losses by buying a separate property damage policy through the National Flood Insurance Program (NFIP).

Flooding may occur from:

  • Overflow of inland rivers, lakes, or other waterways
  • Hurricanes or tidal waves
  • Unusual and rapid accumulation of rainwater
  • Sudden melting of accumulated snow or ice
  • Runoff of surface water from any source
  • Mudflow or landslides

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.


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The Voss Law Firm, P.C. represents clients on a local, national and international basis. We proudly serve companies and individuals along the Gulf Coast and around the globe on a contingency fee basis. Our law firm collects nothing unless we recover on our client's behalf.

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