Resource Library

Flooding: Property Coverage and Risk Management

Man pulls up wet carpet and padding due to floodDate: May 2021

Heavier than average snowfalls, potential rapid thawing and rain on top of already frozen or saturated soil all contribute to the potential for spring flooding in Minnesota. Other weather events throughout the year, including heavy rain resulting in a sudden onslaught of water or the overflowing of lakes and rivers, can also result in flooding to MCIT member property.

All MCIT members receive flood coverage via an endorsement, up to $1 million per member, per year regardless of the number of buildings damaged, with an annual aggregate limit of $20 million to be shared by all MCIT members. Simply put, MCIT covers up to a maximum of 20 $1 million (annual limit) flood claims per year, or members share up to $20 million in coverage for a larger number of lesser-valued claims.

MCIT’s flood coverage responds to direct physical loss or damage to buildings, contents, property in the open and electronic data processing equipment caused by or resulting from flood. Coverage applies to all scheduled buildings except for locations where any portion of the property is located within high-risk areas, including Zone A, zones prefixed A, Zone V or zones prefixed V as classified under the National Flood Insurance Program (NFIP). Where any part of a location is in a high-risk zone, all property at that location is excluded from MCIT flood coverage.

Members should establish a schedule to review flood zone maps annually to confirm the location of their property. Flood coverage must be purchased independently through NFIP for buildings located within any of the high-risk zones. MCIT staff does not provide an opinion on the location of a member’s buildings relative to their being inside or outside high-risk zones.

What Is a Flood?

MCIT considers a flood to be the sudden and accidental onset of water onto land that is normally dry. Typical sources of such water are from the overflowing or breaking of boundaries of any body of water, including reservoirs, lakes, streams, rivers and ponds, but also from the rapid accumulation of rainwater or melting snow.

Flood damage usually results when rapidly rising waters enter a building through doorways or basement windows. Water seepage into basements when caused by overly saturated soil as a result of a flood is also covered.

MCIT’s flood coverage applies to water that backs up through sewers or drains that are below ground level when caused by or resulting from a flood. Loss caused by sewer backups and seepage not caused by flood are excluded elsewhere in the MCIT Coverage Document.

What Is Covered?

MCIT’s flood coverage responds when members incur direct physical damage to scheduled property, contents and/or property in the open. This means that property must be physically damaged by a flood for coverage to apply.

Costs incurred in preparing for a flood, such as the labor and expense of assembling sandbags and moving property to a higher elevation or temporary locations in anticipation of a flood, are not covered, as there has been no physical damage to scheduled property. These costs should be considered in a member’s flood preparation and risk management plans, which are designed to minimize the organization’s potential exposure to loss.

When a claim for physical damage is covered under the flood endorsement, members can also make claims under applicable subcoverages in the MCIT Coverage Document, including extra expense and debris removal.

Extra expense coverage applies when a member incurs expenses over and above normal expenses to continue operations that are performed in the damaged building. This can include the cost of renting another building if the member is unable to continue operations in the damaged building, the cost to service the rented location with heat and electricity and moving costs associated in setting up the temporary location. Each member has scheduled a specified limit of extra expense coverage, which is typically $200,000 for counties.

Debris removal coverage, which applies to the expense of removing debris from damaged covered property after a loss, is available with a limit of 25 percent of the physical damage loss payable at a location up to a maximum of $1 million.

Both of the above subcoverages are subject to their own sublimit and can be applied to the $1 million flood coverage limit. In no case will MCIT pay more than $1 million for a flood damage claim.

For example: A member incurs $600,000 in flood-related property damage to its administration center. Operations at the center are displaced, and the member incurs its extra expense limit of $200,000 to continue operations at an alternate location while repairs are being made. Debris removal costs are verified at $150,000 (25 percent of the $600,000 property damage claim). The total claim of $950,000 is covered under the flood endorsement as it is within the $1 million coverage limit.

Other Flood Coverage

The National Flood Insurance Program is a federal program managed by the Federal Insurance Administration that makes flood insurance available to residential and commercial property owners.

Some MCIT members have considered supplementing their coverage with an additional policy from NFIP, which offers commercial building coverage with a building limit of $500,000 and a contents limit of $500,000 for property within the high-risk zones excluded by MCIT. Generally, the NFIP has a 30-day waiting period from the date of purchase. Detailed information as to eligibility and terms of coverage is available at FEMA.gov.

Risk Management Advice

Before a Flood

  • Determine the flood risk to each property location. Flooding can occur virtually anywhere at any time.  However, some areas are much more susceptible to it than others.
  • Photograph or videotape important or costly items for claims adjusting purposes in the event they are damaged or destroyed.
  • Keep available emergency items such as a first aid kit, flashlight and extra batteries.
  • Place important or irreplaceable items where they are sure to be safe from floodwaters; even if that means storing them offsite.
  • Post emergency telephone numbers by every phone.
  • Prepare and practice flood evacuation routes with employees.
  • Install sump pumps connected to a back-up power source.
  • Install backflow valves or plugs in drains, toilets and other sewer connections to prevent floodwaters from entering them.
  • Move or elevate office furniture, appliances and other contents so they are a minimum of one foot above the highest anticipated floodwater level.
  • Move vehicles and mobile equipment to an area where flooding is not anticipated.
  • Keep cell phones charged fully, as well as backup power cells.
  • Assemble and store above the projected flood elevation a personal three to five day supply of nonperishable food and clean water; a manual can opener; blankets; water-purification supplies such as chlorine, iodine tablets or unscented, ordinary household bleach; baby supplies, if applicable; disposable cleansing cloths such as baby wipes; soap, toothpaste and similar personal hygiene items; prescription medications and any special needs items; rubber boots or waders, sturdy shoes and waterproof gloves; effective insect repellant or long-sleeved and long-legged clothes for protection from mosquitoes and other biting insects; sunscreen.
  • Put together an emergency kit for vehicles that may be used during a flood. The kit should include food, flares, booster cables, maps, tools, first aid kit, fire extinguisher, blankets, etc.
  • Fill the gas tanks of vehicles that may be used during a flood.
  • Secure loose outdoor items such as trash containers and above-ground fuel tanks.
  • Turn off all utilities at their entrance to a building and close the main gas valve if evacuation appears likely.
  • Evacuate immediately upon receiving instructions to do so.

During a Flood

  • Keep a battery-powered radio or television tuned to a local station and follow all applicable emergency instructions.
  • Refrain from walking through flooded areas. As little as 6 inches of moving water can cause an adult to lose footing.
  • If the waters start to rise inside the building before you have evacuated, retreat to an upper floor, and if necessary, the attic or even the roof. Do not try to swim to safety.  Wait for rescuers to arrive.
  • As soon as possible, wash all areas of the body that have come into contact with floodwaters, which frequently contain raw sewage, various chemicals and disease-producing microorganisms.
  • Do not drive through a flooded area. If you come upon a flooded road, turn around and go the other way. Only two feet of moving water can sweep a car away.
  • If floodwaters rise around a car, abandon it. More people drown in cars than anywhere else.
  • Be on the lookout for displaced people, animals and large items.
  • Because water is an excellent electrical conductor, keep far away from downed or submerged power lines. Electrocution is another major cause of flood-related deaths.
  • If evacuated, take only essential items with you. If possible, disconnect all electrical appliances to prevent electrical shock when power is restored.

After a Flood

  • Contact MCIT as soon as possible to file a claim if property covered by MCIT has been damaged or destroyed. Owners of damaged residential and business property should file a claim right away with their insurance agent.
  • Retain damaged property so that it can be inspected by a claims representative.
  • If possible, photograph or videotape flood conditions, particularly those inside of buildings that may change significantly by the time a claims representative can arrive.
  • Before entering a building, check for structural damage in the foundation, walls, etc. Do not enter if it could collapse.
  • Do not enter a building if you are not certain power and gas have been turned off.
  • Upon entering the building, refrain from using matches, cigarette lighters or any other open flames, because gas may be trapped inside. Instead, use a flashlight to light your way. If you smell gas or hear a hissing sound, immediately exit the building and call the gas company from a safe place.
  • Look up as you enter the building to notice any loose plaster or ceilings that could fall.
  • Keep electricity off until an electrician has inspected the building’s electrical system for safety.
  • Pump the water out of below-grade levels of the building in stages over several days. If the water level outside of the building is not below the lowest floor, the walls below grade could collapse if all of the inside water is removed too quickly.
  • Before they dry, remove the deposits and residue left by floodwaters from buildings and other property.
  • Throw out all food, including canned items, medicines and water that may have come into contact with floodwaters. Discard any thawed food rather than refreezing it.
  • Check for sewer and water line damage before using toilets and faucets.
  • Until local authorities declare the water supply to be safe, boil water for drinking and food preparation vigorously for at least five minutes before use.
  • Have a furnace or boiler that has been inundated by floodwaters inspected by a qualified service technician before resuming operation.
  • Once the heating system can be operated safely, start it up to aid in the drying process. Dehumidifiers can also aid in the drying process.
  • Clean out drains, pipes, etc.
  • Be careful walking around. After a flood, steps and floors are often slippery with mud and covered with debris, including nails and broken glass.
  • Follow local building codes and ordinances when rebuilding. Use flood-resistant materials and techniques to protect yourself and your property from future flood damage.

MCIT Coverage

Property coverage for any claim will depend on the specific facts of the loss subject to the terms, conditions, limitations and exclusions contained in the MCIT Coverage Document. In addition to property damage, flood events pose risk of workers’ compensation and liability claims.

Members are encouraged to access the various MCIT resources available that address these exposures, along with risk management tools to help members prepare for and respond to potential flooding.

Members can obtain information about MCIT’s flood coverage as it relates to a specific entity or location by contacting their MCIT risk management consultant toll-free at 1.866.547.6516.

Sources: Federal Emergency Management Agency and Centers for Disease Control and Prevention

The information contained in this document is intended for general information purposes only and does not constitute legal or coverage advice on any specific matter.