A Guide to Flood Insurance for Landlords

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. 

Do I need flood insurance for my rental property?

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. 

What does flood insurance cover?

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: 

• Building coverage: Protects damage to structural components, such as electrical and plumbing systems, furnaces and water heaters, kitchen appliances, interior foundational elements, or detached garages. 
• Contents coverage: Protects damage to the landlord’s (not the renter’s) personal belongings in the covered property such as clothing, furniture, and electronic equipment, washer and dryer, carpets, and other valuables. 

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. 

How much does flood insurance cost?

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. 

Additional insurance coverage to consider

Following are additional insurance options and endorsements that landlords may want to consider when purchasing flood insurance. 

• Basement contents coverage: As noted above, landlords looking to better protect some of the belongings in their basement can purchase coverage from a non-government insurance carrier. 
• Loss of rent coverage: If your rental property becomes uninhabitable due to a flood and your tenant needs to move out temporarily, loss of rent insurance covers the rental income lost during that vacancy while the property is being repaired. 
• Temporary living expense: If you (not a tenant but the policyholder) resides in the property with a covered flood claim, you can use this optional coverage to help with expenses you incur if you need to live elsewhere temporarily while the property is uninhabitable. This can help with extra costs for things like longer commutes to work, hotels/temporary rentals, meals, pet boarding, etc. For landlords, be sure to ask your insurance agent if this optional coverage would extend to your tenant's living expenses should they need to temporarily relocate.
• Renters flood insurance: Landlords can suggest or even require their tenants to purchase their own flood insurance coverage or policy to protect the tenants’ belongings in the event of a flood — a peril that is not covered by standard renters insurance policies. 

8 tips to prepare your rental property for flooding

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.

1. Get a sump pump: Install a reliable sump pump (including a battery-operated backup pump in case of a power outage) to redirect water from your basement back outside. 
2. Clear gutters: Make sure to clear any debris from your gutters to avoid water buildup, and ensure other drainage systems are working properly. 
3. Redirect water: During heavy rain, make sure water drains away from your property and doesn’t build up. 
4. Check your foundations: Confirm your foundation is graded properly and does not have any cracks or other damage. 
5. Regularly inspect plumbing: Ensure your plumbing system and sewer lines are clean and able to handle an influx of floodwater. 
6. Cut back trees: Trim large branches and shrubs to prevent them from falling on your property. 
7. Sign up for emergency notifications: Set up FEMA alerts and follow the local weather forecast for your property locations so you know when flooding is imminent and can receive evacuation orders. Encourage your tenants to do the same so they are aware and can prepare.
8. Purchase sandbags and supplies: If a flood is expected in your area, many flood insurers will cover up to $1,000 for the cost of purchasing sandbags, pumps, tarps, and other protective materials. 

You can get additional flood preparation and prevention tips from the FEMA website. 

How Azibo helps you navigate flood insurance

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?

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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.