Flood Insurance May be a Concern for Rehabbers and Landlords

by | BiggerPockets.com

I don’t watch much news these days, but even if you watch no news at all, you’re probably well aware of the fact that there are several parts of the country that have experienced unusually bad flooding.  Flooding can be caused by a number of factors, and for those who are in the hurricane states (like me in Florida), you know that hurricane season is now upon us and one of the things that come along with a risk of hurricanes is a risk of flooding.

About 10 days ago we closed on a rental property in Fort Lauderdale, Florida. I always get a quote for flood insurance for my properties because I know from personal experience that flooding surely happens outside of FEMA’s official “high risk” flood zones (in fact, according to the Floodsmart.gov nearly 25% of flood claims come from low to moderate risk areas). Imagine my surprise when I attempt to get a quote for flood insurance for the property and our insurance agent tells us that they are not allowed to write any flood policies because Congress let the National Flood Insurance Program (NFIP) lapse on May 31 and the senators are yet to come to an agreement to extend the program. New flood policies and renewal policies have come to a screeching halt.

This is important news for rehabbers and landlords who deal with properties in or near flood prone areas. For those who are rehabbers and looking to resell to retail buyers, you should be aware that closings are stalled all over the country because federally regulated lenders require buyers in flood zones to carry flood insurance. While there are private insurance companies that provide flood, those options are very limited and highly expensive. Be sure to know what your flood zone is and what restrictions exist with your buyers’ lenders.

For landlords with properties in or near flood zones, you may want to check the dates on your flood policies and check in with your insurance agent to see how you should handle payments at renewal time (since its possible that once Congress reauthorizes the flood program it can be retroactive). Also, if you’re in areas that are at risk for hurricanes, you may want to check those windstorm policies to see if you’re covered in the event of flooding that happens as a result of roof damage.

In the meantime investor friends, as Congress battles this out, let’s do our best to protect our assets and stay dry!

Photo: NOAA National Weather Service

About Author

Shae Bynes is a real estate investor in Sunny South Florida. On her blog, GoodFaithInvesting.com, she provides helpful tips and an inside look at her real estate investing adventures -- obstacles, failures, & successes!


  1. Great article, Shae!

    It’s so funny because I was just thinking about this very topic yesterday.

    Now, were you able to get insurance on that rental, or is it uninsured?

    Also, can you tell me a little bit about the different options available to those who are not currently covered by flood insurance?


    • Hey Steph! The home isn’t completely uninsured (it has hazard insurance, including fire and windstorms, etc) but I’m still in waiting mode for flood insurance. I’m going to see if I can find some private insurance options, but it’s not looking favorable. I suspect that Congress is going to extend the program, but the question is…when?

      For those who are not currently covered, they can also look into private insurance options and if that doesn’t look feasible the only thing I can say is that if there’s risk of flooding due to severe rainstorms, etc. they’ll have to do the best they can to protect the property…a quick google search on “protecting home from flood” yields lots of ideas.

  2. This is most definitely a concern for those in flood zones, as well as hurricane prone areas. I knew an investor who got totally wiped out with all his rentals when Hurricane Katrina hit – he did not have hurricane insurance as he was trying to save on costs. Not a good thing. Though, insurance can sometimes be viewed as evil (as it’s always subjective on what is covered/not covered) – it’s been called as one of those “necessary evils.” Thanks for the reminder on this very important topic, Shae!

    • Yep, its definitely important. I’ve had a personal residence damaged from a hurricane so I know it all too well. There’s really no reason not to carry it….the way I see it is that if you can’t cashflow on a property with the expense of insurance, its not a good property to hold. Thanks for the comment, Rachel!

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