Is it covered by flood insurance or water damage?

Flood Insurance Versus Water Damage

Is it covered by flood insurance or is it water damage covered by property insurance? Over the past year, we saw how many storms devastated many parts of the country, flooding homes and businesses, destroying roads, and ruining many lives.

From those storms, we received many calls about how insurance will respond to help law firms recover from the tragedies. So with that in mind, we want to share some insight into how a property insurance policy responds to a water damage claim and where flood coverage comes into play.

How your firm’s insurance policy will respond to these claims depends on how the water entered your office. And while every law firm’s property insurance policy differs, there are basic features common to all property policies.


A firm’s property policy doesn’t provide coverage for flood damage, but it does cover many types of water damage to your office.

For insurance purposes, the damage is considered to occur when water damages your office before the water comes in contact with the ground.

Your property policy would cover the following scenarios as they would be considered water damage:

  • A hailstorm smashes your window, permitting hail and rain access into your firm.
  • Heavy rain soaks through the roof, allowing water to drip through your ceiling.
  • A broken water pipe spews water into your firm.


As the name implies, a standard flood insurance policy, which the National Flood Insurance Program writes, provides coverage up to the policy limit for damage caused by a flood. The dictionary defines “flood” as the rising and overflowing of a body of water onto normally dry land.

For insurance purposes, the word “rising” in this definition is the key to distinguishing flood damage from water damage. Generally, damage caused by water on the ground at some point before damaging your firm is considered flood damage.   A handful of examples of flood damage include:

  • A nearby river overflows its banks and washes into your office.
  • A heavy rain seeps into your office because the soil can’t absorb the water quickly enough.
  • A heavy rain or flash flood causes the hill behind your office to collapse into a mud slide that oozes into your building.

Flood damage to your home can be insured only with a flood insurance policy — no other insurance will cover flood damage.


If, for some reason, a water-related claim is not covered by a flood or property insurance policy, losses from theft, fire, or explosion resulting from water are covered.

For example, if a nearby creek overflows and floods your office, and looters steal some of your furnishings after you evacuate, your property policy would cover the theft because it directly results from the water damage. H wever, the flood damage would be covered only if you have flood insurance.

We hope this provides you with insight into how both flood and property insurance will respond to water damage claims.
If you have any questions or would like to submit a claim, please feel free to give our office a call.

boiler and machinery coverage protects buildings.

Boiler and Machinery Insurance

Boiler and Machinery Insurance is an often overlooked insurance that can help protect your law firm from potential insurance claims.

To help provide some insight into what Boiler and Machinery Insurance are, we have compiled a list of the most common questions associated with the coverage.

What is Boiler and Machinery (Equipment Breakdown) Insurance? 

Equipment breakdown insurance for the financial losses incurred when equipment breaks down suddenly and accidentally.  Causes of loss can include power surges, short circuits, motor burnout, and mechanical breakdown.

Why Do I Need this Coverage? 

The costs associated with your equipment breaking down can be significant enough to affect the normal operations of your law firm.

Who Needs It? 

Suppose your law firm has or owns any type of large equipment like heating and air conditioning equipment, communication networks, or any other large pieces of equipment. In that case, you should consider this coverage.

What Does this Coverage Pay For? 

Equipment Breakdown coverage pays for the cost of repairing or replacing damaged equipment. It can also provide coverage for any income or extra expenses you incur to get your firm back up.

Our Law Firm Just Rents Our Building. Do I Still Need Boiler and Machinery Insurance? 

Even if you don’t own your building, you still face potential losses associated with equipment within your building that could break down. For example, damage to your phone systems, fax machines, computers, and air conditioning units can cause significant financial damage.

If your firm has any additional questions on how this insurance can help, please give our office a call.

Law Firm Property Items

Blanket Insurance

One of the recommendations we usually make to law firms with more than one location is for them to add blanket coverage to their property insurance. As many law firms don’t have this coverage or know what it is, we thought we would provide some insight on how this coverage can help your firm.

This coverage allows you to use one limit of insurance across multiple locations. There are two situations where this usually applies to law firms:

  1. If your law firm has multiple offices with many buildings, this insurance will make covering all of the buildings much more accessible.
  2. Suppose your law firm has property that you move between offices frequently. In that case, it is much easier to have a blanket limit of insurance rather than adjusting your limits of insurance to account for the fluctuations in the property.

Who Needs Blanket Insurance?

If your firm has multiple locations or buildings that need to be insured, a blanket property insurance policy may be ideal.

However, any policy needs to be evaluated on a case-by-case basis. So it is essential to work with a knowledgeable agent who can customize coverage to your needs.

How Much Does It Cost?

One of the most significant benefits of this coverage is that it can usually be added to your policy for no additional premium.

If you would like to find out more about this insurance and whether your law firm needs the coverage or not, please feel free to contact our office.

Outside of an attorney's law office.

What is coinsurance?

A common but seldom understood provision in a property insurance policy is coinsurance.   We have found that many law firms don’t know what coinsurance is and how it affects their insurance policy.

Coinsurance is a “penalty” from insurance companies for underinsuring property.   Only 2% of property losses are total losses, while 86% of property losses are less than 20% of the property’s value.   So to make sure that clients don’t provide limits of insurance that are less than the values of the property, the insurance company has a coinsurance penalty.

Insurance companies will require clients to insure their property up to a specified percentage of the property’s value (usually 80%, 90%, 0r 100%).   If the insured amount is less than the appropriate percentages, the insurance company will invoke the coinsurance penalty in the event of a claim.


The best way to explain coinsurance is with an example of how it works.   Let’s say that a law firm has a building that is worth $1,000,000.   However, to save money on their premiums, the firm decides to insure the building for only $500,000, knowing that its chances of a total loss are minimal.

Now let’s say the law firm experiences a fire that will cost $150,000 to repair.   When the adjuster arrives to assess the damage, he realizes the building’s value is $1,000,000 instead of the $500,000 provided by the firm.   Since the firm only purchased limits equal to 50% of the building’s value, the insurance company will invoke a coinsurance penalty and pay for only 50% of the claim.

It becomes readily apparent with the example that it simply is not worth it to try and insure the property for amounts less than their actual value.   Doing so will not save you much on your insurance premiums while causing you significant headaches in the long run.

Insuring property in a storage unit.

Storage Unit Insurance

One of the questions we receive from a number of the law firm we work with is about properly insuring items inside a storage unit.   Many firms will have excess property they don’t want to keep on campus, so they will typically keep it in a storage unit for a temporary or even permanent basis.

 If the property in the storage unit is stolen or destroyed, how your insurance company will respond is really dependent on how your property insurance policy was written.  Handling the claim could (and should) be as simple as the property adjuster confirming the claim is covered, determining the amount of coverage, and cutting your law firm a check.  

Unfortunately, there are situations where the claim isn’t covered, or the coverage is at a highly reduced amount from the actual value of the property located within the unit. 

Insuring a Storage Unit Properly

When we see problems arise with property claims stemming from a storage unit, it is usually because the insurance agent was unaware the storage unit existed. The law firm didn’t know it needed to notify its agent of the location.  So the best way to ensure you have coverage for the items located within your firm’s storage unit is to have your insurance agent add the storage unit as if it were another location for the law firm.  

With a location address and limit listed on the policy, you can eliminate any claims-related headaches associated with the unit.  (Make sure you talk with your agent about the type of property stored in the unit.  Old tables, desks, and chairs are insured very differently from old firm files and records.) 

Is There Coverage If I Forgot To Include The Location On My Policy?

If you forget to include your storage unit located on the policy and your storage unit is vandalized or destroyed, you may still have coverage on your policy.   Many property policies will include a coverage called “Off-Premises Property” that will provide your law firm with some protection in the event of a claim.   This limit is usually capped at $5,000 or $10,000, so you shouldn’t use this coverage as a safety net.  


Protect your building with equipment breakdown insurance.

Equipment Breakdown Insurance

When equipment is working, we take it for granted. But when something breaks down, things can quickly grind to a stop.For example:

  • A power surge could damage your computer network.
  • Your electrical system could short circuit, causing your business to shut down temporarily.
  • An employee error might damage your only production machine.

Nationwide understands that damaged equipment can mean lost income. That’s why we offer broad insurance for equipment breakdowns to keep business running smoothly.

What equipment breakdown insurance covers

Also known as “boiler and machinery” insurance, equipment breakdown coverage protects against breakdowns caused by power surges, motor burnout, boiler malfunction, and operator error.

It can pay for:

  • The cost to repair or replace the damaged equipment
  • Costs associated with the time and labor to repair or replace the equipment
  • Business income losses when a covered breakdown causes a partial or total business interruption
  • Other expenses incurred to limit loss or speed restoration
  • The cost to replace spoiled stock or materials

What if you don’t own your building?

Even if you lease your building or use equipment that belongs to others, you still need equipment breakdown insurance.

Let’s say you run a restaurant in a leased space, and the electrical panel shorts out, killing power to the heat, air conditioning, lights, and refrigerators for a couple of days. Although the building owner is responsible for making the repairs to the panel, you’ve lost customers and income. Equipment breakdown insurance helps pay for that lost business income.

What if an equipment problem off-site impacts your business?

Sometimes, equipment breakdowns at other locations can cause significant losses to your business.

For example, if you run a small business and depend on your website for orders, the chances are that an independent Internet service provider hosts your site at another location. What happens if that location loses power or experiences damage to its equipment, causing an interruption of your web presence, resulting in a loss of orders? Equipment breakdown coverage helps pay for lost business income when a key supplier’s equipment breaks down.

Will your property insurance or warranties cover damage to equipment?

Most standard property insurance policies do not provide insurance for equipment breakdown, and warranties cover only so much.

Warranties are restrictive and typically cover new equipment for a determined length of time and specific types of product failures. Also, warranties don’t pay for lost business income or equipment damage due to operator error, the cause of many equipment breakdowns.

How much should you buy?

When determining the amounts and limits of coverage, it’s important to look beyond the face value of the insured equipment and consider all the situations that could occur. What if damage occurs to other property as a result of an equipment breakdown? What if parts for the damaged equipment are not readily available? What if you are closed for an extended period of time? You can imagine how equipment breakdown losses could really add up.