What do you do when you get a call that water is pouring out your school’s front door? What if you enter your kindergarten room on a Monday morning, and feel squishy carpet under your feet? Your first thought may be, “Now what?” When water is everywhere, most people are unsure whom to call for assistance or if their insurance covers water damage.
Water can intrude onto your property in multiple ways and its source can determine whether you have coverage. When shopping for insurance, think about all possibilities—what’s historically happened in your neighborhood, to your school, and within your community. Consider future scenarios based on weather trends. Those queues will help ensure you’re planning for your unique scenarios.
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In 1927, the Great Mississippi River Flood caused a costly and disastrous flood. As a result, the insurance industry concluded that flood damage was largely uninsurable.1 The industry determined that the only people who would want flood insurance were those prone to flooding, making the cost too high to attract customers. This created a void that left businesses, schools, and homeowners with few options to help recover from flood and water damage.
The right insurance policy protects your most important financial assets. Understanding how you are—or aren’t—covered for specific types of water damage to your school property and possessions is the kind of financial stewardship that helps you sustain your educational mission.
Even as early as the mid-1850s, the U.S. Congress saw the need for flood control programs. In addition to rounds of appropriated funds for civil engineering projects, Congress also passed the National Flood Insurance Act of 1968.2 This provided a means by which the risk of flood could be insured in the United States. The Act created the National Flood Insurance Program (NFIP), a mechanism by which the federal government could function as the insurer.
According to the Federal Emergency Management Agency (FEMA), a flood is an excess of water on land that is normally dry, affecting two or more acres of land or two or more properties.
NFIP eligibility. You can buy federal flood insurance, no matter where you live, as long as your community participates in the NFIP.3 Note: property covered by the Coastal Barrier Resources Act of 1982 is ineligible. If your school property is located in a regulatory flood plain, mortgage lenders must require borrowers to purchase flood insurance as a condition of the loan.
What NFIP covers. An NFIP policy is substantively different from typical insurance because it only covers a specific kind of water damage—it does not cover everything excluded from a commercial property policy. For example, a policy would cover damage caused by a sewer backup only if the backup is a direct result of flooding. If the sewer backup is not a direct result of flooding, an NFIP policy will not cover the damage.4
An NFIP policy may cover buildings, the contents inside your building, or both, and only at actual cash value. It also covers debris removal as a result of a flood. A policy is in effect following a 30-day waiting period after you’ve applied, and as long as the premium is paid before the policy is effective. There are a few exceptions, so be sure to ask which factors affect a NFIP policy with your agent.
Determine Your Flood Zone. Floods don’t follow city limits or property lines. Using a flood map, you can see the relationship between your property and the areas with the highest or lowest risk of flooding.5 Updates to flood maps are a collaboration between your community and FEMA. You can view an up-to-date flood map for your community at fema.gov/flood-maps.
Whether you are in a flood zone, your property is in a low-lying area, or you have other concerns about protecting your school against flooding, ask your agent if a separate policy through the NFIP is right for you. A Brotherhood Mutual licensed agent can provide policies under the NFIP.
In general, commercial property insurance covers damage caused to school property—like when a car crashes through your front entrance. But what if the water causing damage comes from somewhere other than a flood? Because water is such a unique risk, the answer often depends on what coverage your school has purchased.
Most property insurance policies provide coverage for any sudden and accidental damage, a term that means the damage was unintentional, unexpected, and not due to negligence or failure. If 60 mph winds peel back your 15-year-old roof, and water comes in as a result, that’s generally covered under most property policies. Unfortunately, that’s not the only way water can soak your school.
A drinking fountain pipe breaks or an air conditioner leaks?
The fire suppression system lines freeze and burst?
Water seeps through classroom walls in the basement?
Rainwater rushes in under the gym doors?
An old roof leaks?
Raw sewage overflows into a locker room?
The sump pump stops working?
You find mold or mildew growing due to excess moisture?
Your commercial property policy may cover some specific water claims due to sudden and accidental causes. However, in most property policies you’ll find standard exclusions—things the policy won’t cover—that relate to water, including a few of the scenarios listed above.
Available water damage coverages*. Added coverage to your commercial property policy—known as an insurance endorsement or excess insurance—may provide separate coverage for certain types of water damage, such as for a sewer backup or flood due to subsurface water.
For example, Brotherhood Mutual offers several coverage options to help deal with water.
Water Damage Coverage provides funds to restore damage caused by flooding, storm surge, surface or subsurface water, and backup of a sewer, drain, or sump pump. You select the limit, up to $10,000. If you have an NFIP policy, this coverage is excess to that.
Sewer and Drain Back-up Extension pays up to the limit listed in the policy for direct loss to covered property caused by water that backs up through sewers or drains, explosions, or sprinkler leakage. It does not cover damage related to flood water and water below ground- surface.
Difference in condition and excess policies also are helpful when your school needs additional limits to cover a flood risk. These types of policies can provide sublimits for flood coverage or funds in excess of an NFIP policy. Brotherhood Mutual has options for these as well.
Your insurance agent can help you determine what options are available for the risks your school faces. If you still have questions, contact your Brotherhood Mutual agent for additional information or to discuss your risk concerns and available options.
The first thing you need to determine is the source of all that water. In fact, after inquiring about the safety of your faculty, staff, and students, your agent or insurance company will ask that question first, too. This is critical: finding the cause and source of the water matters in establishing whether or not your school is covered.
Your insurance company or agent will ask you about the source of the water and how the damage was caused. Try to be as specific as possible. Did the water cause property damage due to:
Rain or wind?
Flood or surface water entering the building?
A leaky basement or baptismal font?
Frozen or burst pipes?
A leaky roof unrelated to storm damage?
Sewer of drain backup?
Mold and mildew?
Note: Your insurance company may require an on-site inspection by a staff member or independent adjuster to assess the extent of damages and identify their source. The severity of the loss may determine whether an on-site inspection is necessary.
Get to know your NFIP policy or your commercial property insurance policy to help understand what coverage you have for distinct types of losses. Whether your school sits in a known flood zone, or you are concerned about coverage for a water-related claim, your agent is your best resource.
1 American Institutes for Research. A Chronology of Major Events Affecting the National Flood Insurance Program. December 2005, Washington, D.C. https://www.fema.gov/sites/default/files/2020-07/fema_nfip_eval_chronology.pdf
2 The National Flood Insurance Program. Unit 2: The National Flood Insurance Program. Accessed 9 March 2023. https://www.fema.gov/pdf/floodplain/nfip_sg_unit_2.pdf
3 “Myths and Facts About Flood Insurance.” FEMA, 18 November 2020. https://www.fema.gov/fact-sheet/reyalite-ak-fe-sou-asirans-inondasyon
4 “What Flood Insurance Covers.” FEMA, Accessed 9 March 2023. https://www.floodsmart.gov/whats-covered
5 “Flood Maps.” FEMA, 10 November 2021. https://www.fema.gov/flood-maps
*This informative article briefly describes coverages offered in Brotherhood Mutual’s MinistryFirst® insurance program. The article itself does not provide coverage of any kind, nor does it modify the terms of any policy. All property and liability coverages are subject to conditions, coverage limits, limitations, and exclusions. For precise detail of coverage, please refer to actual policy forms. Brotherhood Mutual is licensed in most states, and some coverages may not be available. Contact a Brotherhood Mutual Insurance agent to learn more.
Posted April 18, 2023
Thank you for your interest in Brotherhood Mutual. We appreciate the opportunity to provide your church or other ministry with an insurance quote and will reply to your request as soon as possible.
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