Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Property InsuranceEasy
A client owns a commercial building and is concerned about potential damage from a flood. They have a standard Commercial Property Policy (Building and Personal Property Coverage Form). When discussing flood coverage, what is important for the agent to convey about their existing policy?
- AFlood damage is covered if it results from a burst pipe within the building.
- BFlood damage is covered under the Special Form of their Commercial Property Policy.
- CFlood damage is typically excluded and requires a separate flood insurance policy.
- DFlood damage is covered if the building is located in a low-risk flood zone.
Show answer & explanationAnswer & explanation
Correct answer: C. Flood damage is typically excluded and requires a separate flood insurance policy.
Standard commercial property policies, including those written on a Building and Personal Property Coverage Form, explicitly exclude damage caused by flood. Flood coverage must be purchased separately, typically through the National Flood Insurance Program (NFIP) or a private flood insurer.
Why the other options are wrong
- A. Damage from a burst pipe is typically covered, but this is distinct from a 'flood' (rising water from outside sources).
- B. Flood is a standard exclusion, even under a Special Form.
- D. Flood risk zone does not change the standard exclusion in a commercial property policy; it only affects the availability and cost of separate flood insurance.
Flood Exclusion (Commercial Property)
Standard Commercial Property Policies typically exclude damage caused by flood, which is defined as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties.
- Flood is a standard exclusion in all commercial property forms.
- Must be purchased separately, often through the NFIP.
- Includes overflow of inland or tidal waters, unusual accumulation of run-off, mudslides.
Memory trick: War, nuclear, flood, and quakes are not for standard takes.