Yes. Floods, earthquakes, and acts of terrorism are typically not included in coverage.
Safeguarding against flood damage.
Standard property insurance policies often do not provide protection for damages caused by flooding. To determine if your business is situated in a flood-prone area, reach out to your local government office or commercial bank. Additionally, inquire about any historical instances of flooding in your vicinity. It's important to note that government initiatives to map flood-prone zones might lag behind new developments.
If you require flood insurance, get in touch with your insurance agent or consider the National Flood Insurance Program. For further details about this program, you can call 888-CALL-FLOOD or visit their website at https://www.fema.gov/flood-insurance. In situations where buildings within flood zones don't adhere to flood plain construction codes and sustain damage exceeding 50 percent of market value, the federal government mandates their demolition. To manage the additional expenses associated with tearing down and rebuilding such structures, consider obtaining "ordinance or law" coverage. Should your policy incorporate a coinsurance clause, ensure that your property is adequately insured to comply with this provision.
Safeguarding against earthquake damage.
Most property insurance policies, including those for homeowners and businesses, do not encompass coverage for earthquake-related damages. If you reside in an earthquake-prone region, you will need a specialized earthquake insurance policy or a commercial property earthquake endorsement.
Earthquake policies typically feature a distinct type of deductible – a percentage of coverage as opposed to a fixed monetary value. For instance, if your building is insured for $100,000 with a 5% deductible, your business would bear the initial $5,000 in damages following an earthquake.
It's important to keep in mind that business interruption insurance, which compensates for lost income during periods of closure, exclusively applies to damages covered by your business property insurance policy. In the event that earthquake-related damage forces your business premises to shut down, you must have earthquake coverage to file a claim under a business interruption policy.
Safeguarding against losses stemming from terrorist attacks.
As per the Terrorism Risk Insurance Act of 2002, only businesses opting for optional terrorism coverage are eligible for compensation in the event of losses caused by acts of terrorism. Workers' compensation, however, provides coverage for injuries and fatalities resulting from terrorist acts.