Flood risks are growing fast in the U.S., and many commercial property owners may not be fully prepared. Flood damage costs now average $32.1 billion a year and are expected to rise to $40.6 billion by 2050, according to a 2022 study from the University of Bristol. This is a worrying trend for businesses who still face uncertainty about the best insurance options to protect their assets.
John Dickson, president and CEO of Aon Edge, says current flood insurance options fall short for many commercial owners. The National Flood Insurance Program (NFIP) has been around for over 50 years and offers a basic level of protection—up to $500,000 for building coverage and $500,000 for personal property. However, it doesn’t cover anything beyond those limits or losses like business interruption, which can leave companies vulnerable.
Dickson pointed out that while the NFIP helps businesses meet loan requirements, it doesn’t always offer enough protection to keep a business running after a flood. Over the past decade, some new insurance products have emerged, offering higher coverage limits and options to recover lost income. These innovations aim to help businesses bounce back faster.
One major challenge is that many property owners rely on outdated flood maps, some over 10 or 15 years old. Using old maps makes it harder to get an accurate picture of current flood risks. Dickson suggests using up-to-date data, analytics, and advanced models to better understand the risk today, not based on past conditions.
Every business’s needs are different, and insurance limits should reflect that. While the NFIP’s one-size-fits-all $500,000 cap might work for smaller properties, many commercial buildings are worth much more. Today, solutions exist that can provide coverage in the range of $10 million to $20 million or more for bigger or more modern properties.
Loss of business income due to flooding is a growing concern. New insurance options can reimburse owners for income lost during flood-related closures, something rarely covered before in flood insurance policies.
Aon Edge has worked to make the insurance buying process faster and simpler, meeting today’s demand for instant responses. Dickson compares it to “order now, get it by the end of the day” service models that have become popular. Their platform uses real-time risk scoring and catastrophe models to quickly generate insurance quotes. This lets business owners and their insurance agents make fast decisions without long waits.
Aon Edge also uses its own advanced catastrophe models, supported by artificial intelligence and expert analysts, to provide accurate flood risk assessments. Their team helps clients understand risks in a way few others do.
For business owners, the key takeaway is to update their understanding of flood risk and explore insurance options beyond the NFIP’s limits. With floods becoming more frequent and costly, having the right coverage could be the difference between recovering quickly and suffering significant losses.
For more information about Aon Edge’s flood risk solutions, visit their website.