What Houston is Teaching Investors About Flooding?

Recently we did taco night for dinner. It's usually a combination of tacos and cheese dip.

I always cook the cheese on low constantly making sure to not burn it. Some how every time I get distracted and burn it to the bottom of the pan. However this particular night the cheese came out perfect with no burning to the pan.

It reminded me that anything is possible like the city of Houston going a year without flooding or properties flooding that have never happened before.

Houston has been hit really hard with flooding over the last five years. Its not just hurricanes that have caused flooding but also urban flooding from afternoon thunderstorms.

Many of these areas were in non mandatory flood zones also known as flood zone X.

So many residents and property owners have been left with paying for everything out of pocket.

So if these were non mandatory zones why did they flood?

Part of the problem is that many people and sometime communities look at a flood map as what the risk of flooding in that area will be. It's important to understand that flood maps are used from a regulatory standpoint to identify high risk areas. They can't tell us if a property will flood and how much water will be in the property.

If that was the case many property owners would have had coverage in place to cover these floods. Apartment building owners are a group that have learned this lesson the hard way.

Apartment building owners can get hit twice when it comes to flooding.

1. Building
2. Rent

The first area that apartment building owners have to worry about is the actual building being damaged. Imagine having to completely redo 100 apartments. As you can imagine that can get expensive and be time consuming.

Now imagine losing rent on these units for 6 months. That could cause anyone to go broke. Well these are two areas that private flood insurance policies address. Having replacement cost on a building like this can be very important in bringing them back to being livable.

Imagine getting half way done with repairs only to realize you are out of money. This is exactly what can happen without the proper flood insurance coverage.

Unlike the National Flood Insurance Program private flood insurance companies can offer business interruption coverage. This coverage can help cover things like loss of rent. This can help a property continue to get income while a property is being repaired.

So how do you chose the right flood insurance replacement coverage on your apartment building?

Well its recommended that you find a good commercial insurance agent that deals with properties like this each day. Then make sure that the replacement cost on your flood insurance matches the building coverage.

So what about business interruption coverage?

Here at the flood insurance guru we recommend starting with about 6 months of expenses. If you can get this amount covered then it should hopefully give you enough time for repairs. It's important to understand that many private flood insurance carriers may limit business interruption coverage to 10 to 20% of the insured amount of the building.

So if you have questions about getting the right flood insurance on your apartment building then make sure to click here. you can also check out our daily flood education videos on our YouTube channel.

Remember we have an educational background in flood mitigation so we are here to help you understand your flood risks, flood insurance, and mitigating your apartment building against flooding.