Flood exclusion

Flood is one of the most consistently misunderstood words in insurance because the everyday meaning and the policy meaning are different. Water falling from the sky through a wind damaged roof is usually a covered property loss. Water rising from the ground, including storm surge, overflow of a body of water, and in many forms surface water accumulating after heavy rain, is flood, and standard commercial property policies exclude it.

The gap is filled either through the National Flood Insurance Program, which has building and contents limits that many commercial risks outgrow quickly, or through private flood and difference in conditions coverage that can be written at higher limits and often with broader terms. Business income from flood is a separate consideration again, because losing the building and losing the revenue are two different exposures.

Two habits prevent most surprises. Read the water section of your policy rather than assuming, since sewer and drain backup is yet another separately endorsed peril. And do not rely on the flood map alone, because a meaningful share of flood claims come from properties outside the highest risk zones.

Related terms

This page is education, not advice. Policy language varies by carrier, form, and state, so confirm how your own program is written with a licensed insurance professional.