Yes, you can get flood insurance on a rental property?
Your step-by-step guide and plan to getting flood insurance on a rental property.
As a landlord, ensuring you have the correct insurance to cover your asset and investment is important. However, many landlords forgo buying flood insurance on their rental property, which hurts their financial future, and don’t make this same grave mistake. One of the best and most significant ways to protect your financial future is to get a flood insurance policy for your rental property. We, Flood Nerds, will show you how easy and inexpensive flood insurance can be.
There are two types of flood insurance you can get for your rental property.
Fema flood insurance for rental property, also referred to as the National Flood Insurance Program (NFIP) or we Flood Nerds simply call it the government option.
When you need a flood insurance quote, you can search for NFIP flood insurance or private flood insurance. Or you can stop wasting time trying to be an expert in this complicated insurance product and let a Flood nerd shop for you.
We will shop both the private flood insurance market and the government option to compare them and work towards getting a great product at a better price.
What is your rental flood insurance plan?
A rental flood insurance plan needs to start understanding how you want to ensure your property. If your home is a long-term rental and the contents in the structure are not yours but your renter’s, then you should only need to cover the structure. If your home is in a high-risk flood zone, usually identified as an AE flood zone or a VE flood zone. Then your lender will require flood insurance on the structure, and the maximum you can get with the government option is $250,000 in-building coverage. Many private flood policies can go much higher. However, most lenders only require the loan balance or the maximum that the NFIP has set, which is $250,000.
What is your rental?
If your investment is a short-term rental. As it seems, there is a new trend for investors. And you intend to list your property for rental as advertised on VRBO, Airbnb, or any of the new websites that manage your short-term rental property. The structure is likely also filled with your own furniture and other items. These would fall under content coverage, so you should also consider covering those. The NFIP’s maximum is $100,000, and most private flood insurance underwriters follow this same maximum guideline. If you require more coverage, you should speak with your Flood Nerd to explain why so we can help the underwriter understand.
What happens if I have to file a claim?
Let’s pray that you never have flood waters in your home. This is devastating for sure. And in the unfortunate event that you do (wacky weather as of late). When you file your claim with the underwriter directly, they will assign a claims adjuster who will likely visit your damaged property. Take photos and interpret the coverage that is in the policy jacket. One thing to note is that if you make any kind of profit off a property (and the adjuster will do their research to see if you have it listed on the sites above), it will be considered a business. As with all business insurance products, flood insurance will follow their standard and pay you out on Actual cash value (ACV), which means that the adjuster will depreciate the structure and the contents when figuring out what the underwriter will give you as the claim amount. Note that contents will typically always be ACV.
Questions to consider with getting flood insurance for your rental property.
- Am I being required by my lender?
- How much at risk do I think my property is for flooding?
- How much coverage do I want or need on my structure?
- Do I need content coverage?
- Should I tell my renters they need their own flood policy to cover their contents?
- Can I get lost rent if I have a flood?
- Do I care if the policy is NFIP vs. Private flood insurance?
- Do I need to speak to a Flood Nerd to discuss my options?
- How do I get a quote?