Does Business Insurance Cover Rain-Related Losses?
Heavy rain can disrupt business operations, damage property, and create costly setbacks for companies of all sizes. In Texas—where storms can develop rapidly—business owners often wonder whether their commercial insurance will cover rain-related losses. The answer depends on the cause of the damage, the type of policy, and whether the rain triggered other events like flooding or wind damage. Below is a breakdown of what commercial insurance typically covers during heavy rain.
Property Damage From Wind-Driven Rain
Commercial property insurance usually covers rain damage that enters a building due to a covered peril, such as wind damage. For example, if strong winds break a window, tear off flashing, or damage roofing materials, and rain enters through that opening, the resulting interior water damage is generally covered.
This includes damage to:
- interior walls and ceilings
- flooring and carpets
- furniture and office equipment
- inventory and supplies
- electrical systems
However, if rain enters due to poor maintenance—like an old, deteriorated roof—claims may be denied.
Flood Damage Is Not Covered by Standard Policies
One of the most important distinctions is that flooding is not covered by standard commercial property insurance. Flood damage includes any water that rises from the ground or flows into the business due to heavy rain.
To protect against this risk, companies must purchase commercial flood insurance through the NFIP or private insurers. Without this coverage, business owners may be responsible for repairing:
- flooded floors or carpets
- damaged drywall
- soaked inventory
- ruined equipment
- mold or mildew growth
Water Backup or Sewer Overflow Coverage
Heavy rain can overwhelm municipal drainage systems, causing water to back up through drains, toilets, or sewer connections. Standard policies do not automatically cover this type of damage.
Businesses can add water backup coverage, which covers cleanup, repairs, and damaged items caused by drain or sewer overflow. This endorsement is critical for restaurants, retail stores, and buildings with basements.
Business Interruption Coverage
If heavy rain forces a business to close—due to water damage, roof leaks, or wind-driven rain—business interruption insurance may cover lost income and operating expenses.
Coverage applies if:
- the rain damage is caused by a covered peril
- the building becomes unsafe or unusable
- the business experiences a revenue loss
However, business interruption does not apply if the closure was due to flooding unless you have flood insurance with interruption coverage.
