ISO commercial flood insurance coverage form now available
ISO's Commercial Flood Insurance Policy is similar to a commercial property policy but it has differences that insurance agents and brokers need to know.
Although most people think of flood insurance in connection with residential properties, after Superstorm Sandy in 2012 and the 2017 hurricane season, it’s quickly becoming clear that commercial properties need protection too. Flooding affects more properties than fire each year and is the most common natural disaster in the country, with 98% of U.S. counties susceptible.
According to Christine G. Barlow, CPCU, author of the “Commercial Flood Insurance Coverage Guide,” the ISO policy provides an alternative to the National Flood Insurance Program (NFIP) for commercial property owners and occupants. The NFIP program, which is set to expire on July 31, has a Dwelling policy for homeowners, renters or owners of residential buildings with one to four units.
There is also a General Property form that’s used for commercial properties, which is available to owners of residential buildings with five or more units or owners or lessees of nonresidential business or other nonresidential buildings or units. The final policy available through NFIP is the Residential Condominium Building Association Policy, which is specifically for residential condo associations and is obtained on behalf of the association and unit owners.
Related: The 2018 hurricane season is here: Are you prepared?
Carriers determine eligibility
The ISO commercial flood program became effective April 2018, Barlow says, and it doesn’t have the extensive eligibility criteria that the NFIP policy does. The ISO program is available for use by many carriers and underwriting departments that are likely to determine their own eligibility criteria for risks. Carrier actuaries will determine rates, although the ISO manual includes standard property rate modification factors to be applied to those rates.
The ISO policy is designed to be a stand-alone policy, and can be written on a primary, excess or contributory basis, Barlow explains. Unlike the NFIP policy, which has a 30-day waiting period, the ISO policy has a 72-hour waiting period from the inception of the policy or 72-hours from the addition of a location midway through the policy term or at renewal.
Related: Top 10 states at risk of hurricane storm surge damage in 2018
Similar to a commercial property policy, the ISO commercial flood policy provides coverage for the building, business personal property and personal property of others, as well as optional coverages. Limits are selected by the insured, Barlow notes, based on the value of the property depicted by the insured, often with assistance from the insurance agent.
Some terms of the ISO commercial flood insurance policy are similar to those found in other commercial property policies, but there are significant differences as well. Insurance agents and brokers should make sure that they’re familiar with the form and its accompanying manual. As 2018’s hurricane season gets underway, the new form offers agents and brokers an opportunity to discuss flood insurance options with clients — before the next flood, not after.
Related: NOAA predicts 5 to 9 hurricanes in 2018
Christine G. Barlow, CPCU, is managing editor of FC&S Online and the author of the “Commercial Flood Insurance Coverage Guide,” published by The National Underwriter Company, a sister company of PropertyCasualty360.com. Christine will also be presenting will be presenting a practical, insightful webinar discussing the complex ins and outs of hurricane coverage on June 20 at 3 p.m. ET. For more information or to register for the webinar, visit the website.