Flood insurance is what might be one of the most important coverages you can get nowadays. A single flood policy can provide flood protection for thousands of dollars. However, did you know that not only residential homes and commercial buildings can get flood insurance?
In this article, we want to talk about how you could protect your flood insurance premiums as a landlord, or apartment building owner, and make flood insurance easier for you, your property, and your renters.
Flood Insurance for Apartment Building Owners
When it comes to flood insurance as an apartment building owner, you want to make the most out of your investments. Considering how most of your properties will be one of the sources of your income, it's best to help them avoid getting ravaged by flooding. This will not only impact your property but also the potential customers you may have in the future.
So let's talk about the things you can do to make utilize your flood insurance best. We will talk about the following things:
- Blanket Flood Insurance Coverage
- Loss of Use
- Replacement Cost & Elevation of Structure
First, it's important to know the type of flood insurance coverage you need to get for your property. This may be through individual/specific flood coverage or blanket flood coverage.
The difference between these two is that individual coverage is only specific to a single property. So the building and personal property coverage with your flood policy will only be applicable to a single structure. This is not really ideal if you have multiple properties.
On the other hand, you may be able to get a blanket flood insurance policy; which really eliminates most of the limits you will see on an individual flood policy alone.
Blanket insurance means that you may get the same flood insurance coverage for multiple properties with just a single policy. This means that flood coverage for flood damages may apply to more than one type of property at the same location or the same type of property at multiple locations.
It's important to note however that the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) generally don't offer blanket flood insurance coverage however you can still get one through other private flood insurance companies.
Loss of Use Coverage
Now, let's jump into one of the things that you should be looking to include with your flood insurance policy: loss of use coverage.
Loss of use is generally an additional coverage that you can get with flood insurance. The purpose of this coverage is to provide you with actual cash or any form of reimbursement for you as the property owner of a rental property.
When your property gets hit by flood, as the repairs are ongoing, you won't really have use of the property. With this coverage, instead of not being able to earn anything as the repairs are ongoing, the flood insurance policy may provide you with whatever potential income you are losing during that period.
Replacement Cost & Elevation of Structure
Last on our list is the replacement cost value of your property and why protecting it from flood damage can directly impact the profitability of your property as an apartment building owner.
Replacement cost is simply the amount or cost of the property's structure if you were to sell it on the market. For flood insurance, this is generally considered because the replacement cost will be the basis for your flood insurance rates. So if you have a higher or more expensive amount for the building, you may also start to see some form of an increase in your rates.
It's equally important to also consider the elevation of your property because this generally shifts your risk of flooding. An elevation of your property will also help show that you are at a reduced risk for flooding.
This is why despite elevation certificates being no longer required for flood insurance, it still is a helpful document in lowering your risk and sometimes even removing your property from a flood zone.
Protecting Your Premium Rates
When you start processing the purchase of flood insurance, it's best to consider these three things in order to protect your premium rates. This is really important especially if you have a building that sits in a high-risk area where the chance of flooding is not only high but also sometimes unpredictable.
As a property owner of apartment buildings, you may want to make the most out of your flood insurance coverage. For the federal flood insurance side of the market, you may start seeing a max of $500,000 on your building coverage.
Although the private flood insurance market has more flexibility with coverage amounts, meaning you can go further than $500,000 for your building coverage, this won't really guarantee that you can lock in on your premium rates.
One of the biggest risks of a flood-prone property is that you also lose interest and appeal to your potential customers. If people start to see that your property is a high-risk one when it comes to flooding and damages, renters might choose another option. This in turn will hurt the profitability of your property long-term.
If you are ready to take the next steps to get the right flood insurance coverage then there are three simple steps.
- Fill out this form —
- Talk with our flood education specialist.
- Get back to the important things in your life.
Got more flood insurance questions? Visit our Flood Learning Center below to know more: