Learn the basics of flood insurance, including key risk factors and tips for getting the right coverage for your rental property.
Flooding is the most common natural disaster in the U.S. The cost of flood damage is steep — the average flood claim payout from the NFIP was $44,401 as of 2021. In fact, FEMA reports that just one inch of water can cause $25,000 of damage to your home.
A variety of weather systems can cause flooding, and the risk is only increasing as global warming continues to impact our climate. The Office of the Flood Insurance Advocate (OFIA) received 36% more cases from April to June 2022 compared to the prior quarter.
For landlords, flood insurance is a smart way to minimize risk and protect their rental properties. Keep reading to learn what flood insurance covers (and doesn’t), additional policies to consider, and steps to protect your property and tenants from a flood.
Flooding can be caused by a variety of weather patterns — from snow melting in the spring, to hurricanes and tropical storms, to heavy rains.
Major flooding events occur in every U.S. state and can occur even if you’re not near a body of water. In fact, 20% of flood claims occur to homes outside of high-risk areas. Whether your rental property is on the coast, inland, or at altitude, flood insurance is something landlords should strongly consider.
Before we go into what flood insurance covers for rental properties, let’s first differentiate between flooding caused by a natural disaster versus plumbing issues. While many standard homeowners insurance policies cover water damage caused by an unexpected pipe bursting (as long as it was properly maintained), they don't typically cover flood damage caused by a natural disaster.
Many homeowners get natural disaster flood insurance through the government-backed National Flood Insurance Program (NFIP), which is part of FEMA. An NFIP flood insurance policy typically covers the following two areas, which each have their own deductible:
Landlords looking for more comprehensive or customized coverage can get flood insurance from private insurers. For example, contents in a finished basement such as couches, televisions, or family keepsakes are typically excluded from NFIP policies — but rental property owners can get that coverage from a private insurance carrier. Private flood insurance policies allow you to tailor your policy to cover more of your assets at higher coverage limits.
Most flood insurance premiums are less than $1,000 per year, which far outweighs the cost of an average claim. But for coverage of non-primary residences like rental properties, note that NFIP charges an extra $250 annually.
Landlords should also note that there’s a waiting period for flood insurance (30 days for NFIP and 10 days for some private insurers), which means you won’t be able to file a claim during that initial time after you purchase your policy.
Following are additional insurance options and endorsements that landlords may want to consider when purchasing flood insurance.
Even if you have a comprehensive flood insurance policy, it’s best to take steps to protect your rental property from water damage. Here are a few tips to minimize risk and educate your tenants about flooding safety.
You can get additional flood preparation and prevention tips from the FEMA website.
Azibo can guide you to find the right flood insurance policy at the right price for your rental property. We’ll help you understand your existing coverage and review a map of your property to advise what level of flood coverage to consider — whether it’s an add-on to your existing plan or a separate policy.
Azibo’s insurance offerings allow you to tailor your policy for higher coverage limits, as well as get access to a shorter waiting period (10 days vs. NFIP’s 30 days) and no surcharge for rental properties. You can also choose from additional options including replacement cost, temporary living expense, basement contents, pool repair/refill and detached structures.
Landlords are able to get a flood insurance quote through Azibo quickly (usually just a few days) without having to submit an elevation certificate. Our experts will then help you unpack the terms of your coverage so you have full insight into what you’re paying for — and what may not be protected in the event of a flood.
Unfortunately, flooding is a reality of the natural landscape in the U.S. Getting the right flood insurance coverage and knowing how to prepare your rental properties and tenants will minimize risk and provide peace of mind if disaster strikes.
Interested in learning more about Azibo’s flood insurance offerings?
Wondering about other natural disaster insurance options? Check out our Guide to Wildfire Insurance for Rental Properties.
Azibo Insurance Services LLC, a wholly owned subsidiary of Azibo Inc, is a licensed insurance producer. Contact us to discuss your specific insurance needs.
Disclaimer: The information provided in this post does not, and is not intended to, constitute insurance advice; instead, all information, content, and materials are for general informational purposes only. This content may not constitute the most up-to-date insurance information. Readers must contact a licensed insurance agent or company to obtain quotes, advice, and guidance with respect to any insurance matter. No reader, user, or browser of this article should act or refrain from acting on the basis of information herein without first seeking the advice of a licensed insurance producer.
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This article and the Azibo Blog in general is intended for informational and educational purposes only. It is not investment, tax, financial planning, legal, or real estate advice. Please consult your own experts for advice in these areas. Azibo provides information believed to be accurate, but Azibo makes no representations or warranties about the accuracy or completeness of the information contained on this article or blog.