In New York City, we have been accustomed to flash floods that have affected properties. There are also designated areas in the City, particular near the shore that are considered flood zones that additional flood insurance is needed. Normally regular insurance policies do not cover flood insurance and you usually have to obtain a flood insurance policy via the National Flood Insurance Program (NFIP). You might think that you may not need flood insurance but we have seen tremendous flash floods and hurricane type events that it may be needed. It has been reported that there will be 9 Hurricane level events this Hurricane season. The probability of hitting NYC is slim, however if it does it can be catastrophic. So let’s talk about flood insurance.
Flood insurance is just what it sounds like: it covers your rental home in the event that it is damaged or destroyed by a flood. It covers the actual cash value of the physical structure of the home, 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.
It should also be noted that tenants are also allowed to cover flood insurance. According to FEMA, a renter can purchase a flood insurance policy via the National Flood Insurance Program (NFIP) for up to $100,000. Renters may be eligible for a Preferred Risk Policy if they are in a low to moderate risk area.
There are certain things that flood insurance does not cover and the purchaser of the policy should be aware of it. Flood insurance does not cover decks, fences, landscaping, or pools. This means that you will be responsible for the expense of replacing these items. Also, the policy only pays for the actual “cash value” of the loss at the time of the loss instead of the actual value of the property. That means that they will take into account the depreciation of the items when they cover and will not pay you the total replacement value.
Having the right insurance is an important aspect for a homeowner. Making a mistake can cost you thousands of dollars per occurrence of a flash flooding. Contact your local insurance provider to make sure you have the right coverage.
BJD Property Management can assist you in the obtaining the correct coverage. BJD Property Management is a full service NYC property management company servicing NYC. We assist managing all investment properties of all sizes.