Flood coverage for the business building.

Building or contents: how the NFIP form sorts it

For a business building, the NFIP writes the General Property Form (FEMA F-123, October 2021). It covers non-residential buildings, residential buildings designed for 5 or more families that are not condominium buildings, and their contents. Building and contents carry separate limits.

Building (Coverage A). Besides the structure, the form lists equipment insured under Coverage A only, including:

• Central air conditioners, furnaces and ventilating equipment
• Elevator equipment, fire sprinkler systems and fire extinguishing apparatus
• Walk-in freezers, pumps, light fixtures, awnings and canopies

Contents (Coverage B). If purchased, business contents means furniture and fixtures, machinery and equipment, stock, and other property used in your business, inside the fully enclosed building. A tenant may apply up to 10 percent of the contents limit to improvements made part of the building that it acquired or paid for; this does not raise the contents limit.

Property not insured. The form's list includes personal property not inside the fully enclosed building, land and plants, money and valuable papers, wells and septic systems, walks and driveways outside the exterior walls, and fences, retaining walls, bulkheads and docks.

Send me an equipment list and I'll sort it before the two limits are set. A commercial property policy may sort them differently.

Condo associations use a different NFIP form

The General Property Form does not insure a residential condominium building in a regular program community. That building goes on the Residential Condominium Building Association Policy, or RCBAP (FEMA F-144, October 2021), which defines a residential condominium building as one with at least 75 percent of its floor area residential. The OCC notes that only the owners' association may buy it.

For a board or property manager:

• One policy, all units. Building coverage includes every unit in the building and the improvements within the units.
• The program ceiling. Per the OCC, the most building coverage available is the lesser of 100 percent of the building's replacement cost or the number of units times $250,000.
• Coinsurance. The form applies a penalty to a building loss payment unless the building limit is at least 80 percent of replacement cost or the NFIP maximum for that building, whichever is less. Here is how a coinsurance clause works.
• Replacement cost, after the work. The form settles building losses without deduction for depreciation, but nothing is owed on a replacement cost basis until repair or replacement is completed.

Before renewal, get a current replacement cost figure; the coinsurance test is measured against it.

After major damage: Increased Cost of Compliance

Coverage D on the General Property Form, Increased Cost of Compliance (ICC), is designed to help pay for bringing a flood-damaged building into line with state or local floodplain law. The program limit is up to $30,000. It applies only to policies with building coverage and is paid in addition to the building limit chosen, though building and ICC payments together cannot exceed the maximum the National Flood Insurance Act allows.

FEMA describes two triggers, both determined by your community:

• Substantial damage: repairs cost 50 percent or more of the building's pre-damage market value.
• Repetitive damage: the community has a repetitive loss provision, and the building flooded twice in 10 years, with repairs averaging at least 25 percent of market value and a flood claim paid each time.

Eligible work is elevation, floodproofing, relocation or demolition, alone or combined. FEMA says floodproofing is available primarily for non-residential buildings. The form does not pay ICC until the work is done, and requires it to be done as soon as reasonably possible, within two years of the loss. The determination typically comes when you apply for a building permit; after it, FEMA says to contact the insurer or agent who wrote the policy to file the ICC claim.

Official sources

• FEMA: NFIP Summary of Coverage, Commercial Property (F-778, January 2024)
• FloodSmart (FEMA): Flood insurance coverage limits
• FloodSmart (FEMA): The ins and outs of NFIP commercial coverage
• 44 CFR 61.11: Effective date and time of NFIP coverage
• 42 U.S.C. 4012a: Flood insurance purchase and compliance requirements
• FEMA: Fact sheet, How to buy flood insurance
• FEMA: Flood zones
• FEMA: Risk Rating 2.0 fact sheet (April 2025)
• Texas Department of Insurance: Commercial property insurance guide
• California Department of Insurance: Commissioner urges Californians to review coverage before El Niño storms
• NAIC: Flood insurance
• FEMA, NFIP General Property Form Standard Flood Insurance Policy, F-123 (October 2021)
• FEMA, NFIP Residential Condominium Building Association Policy, F-144 (October 2021)
• OCC HelpWithMyBank, Residential Condominium Building Association Policy (RCBAP)
• 44 CFR 60.3: Flood plain management criteria for flood-prone areas (Cornell LII)
• FEMA, NFIP Technical Bulletin 3: Dry Floodproofed Non-Residential and Mixed-Use Buildings (January 2021)
• FEMA, National Flood Insurance Program Underwriting Forms
• FEMA, Increased Cost of Compliance Coverage