What does flood insurance cover (and cot cover) for a rental property? If you live in Florida, that is a question that would have crossed your mind a few times. When it comes to flood insurance, you must have enough to cover the loss of your investment. No matter how that loss occurs.
While good landlord insurance policies are reasonably comprehensive, these policies rarely include flood insurance. Usually, you must purchase flood insurance as a separate policy through the National Flood Insurance Program (NFIP).
And before thinking you don’t need it because your rental homes aren’t in any high-risk areas, consider that floods and flash floods often strike without warning. And, according to FEMA, they can, and do happen in all 50 states. Hurricane Ian has just proven the point, with major flooding to lakes and waterways.
What does flood insurance cover?
Flood insurance is just what it sounds like: it covers your rental home if it is damaged or destroyed by a flood. It covers the actual cash value of the physical structure of the house. So insurance covers the plumbing, electrical, and heating systems, cabinets, and a detached garage (if any). You can also buy coverage for other items, such as furniture, curtains, and appliances. Although usually most of the personal property in a single-family rental home belongs to the resident.
What does flood insurance not cover?
There are several items that flood insurance does not cover. And if your landlord insurance policy also does not cover these items, remember that you may need to pay to replace them out of pocket. For example, flood insurance does not cover decks, fences, landscaping, or pools. If a flood washes your landscaping away or damages your rental home’s pool, you might be stuck with the full cost of these repairs.
Flood insurance also may not cover damage caused by mold in some instances, even if it’s a direct result of the flood. That means the clean-up may also be coming out of your pocket.
Flood insurance does not cover the replacement cost of rental homes.
Finally, it’s important to note that flood insurance does not cover the replacement cost of rental homes. This is a significant difference between owner-occupied homes and rentals. Flood insurance covers the actual cash value of the property. Meaning that the insurance will only pay you what the home’s components are worth at the time of damage.
For example, if you added a new 20-year roof to your rental home 10 years ago, the insurance would only pay you for half of the cost of replacing the roof. For this reason, it’s essential to examine your coverage amounts carefully. And make sure that you are not paying for “full replacement” insurance when that’s not what you will get.
How we can help?
Making sure you have the right insurance coverage can be a challenge, unless you have the experts at Real Property Management on your team. We can help you get the right amount of coverage for your investment portfolio. And ensure that your properties are prepared for the unexpected.
To determine the right cost, we will look at factors like the location and structure of your home. Including how near it is to a body of water, and its elevation. Costs also depend on the type of coverage you have selected, such as replacement cost value versus actual cost value. We will also analyze factors such as the flood zone designation, the age of the property, and the number of floors. This can all impact pricing, and will take all these into account.
Our property management professionals have the necessary local knowledge and required experience. Look no further than Real Property Management Premier. Contact us online or call 954-800-4433 and ask our property managers about our services in detail.
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