Apartment Building Private Flood Insurance

Apartment Building Private Flood Insurance is typically required of buildings that carry a mortgage and that are located in high hazard flood zones.  By FEMA definitions these flood zones basically include the A and the V zones.   There are variations of these two types of flood zones, but essentially if your building is in one of the types of flood zones, you probably then will be required to carry flood insurance.

Most flood insurance is sold and serviced in the United States and run through the National Flood Insurance Program.   The National Flood Insurance Program is administered through the US Federal Government and the Department of Homeland Security.  FEMA runs the program through this Department.   Most Carriers in America sell the policy on NFIP paper.   It may be sold by your local agent, but in the end the Feds are the ones writing a check on a claim.   The Government then creates the underwriting rules and regulations and sets the pricing.

Most Flood Insurance in the United States is written through…FEMA

In recent years NFIP flood policies have seen a surge in premium costs.  Clients have come to be me, telling me that their apartment building is 6 or 7 times more expensive to insure than it was when they purchased the policy.   With all of the increased premiums a small window opened up for private companies to enter the market.

Now many apartment owners have another option.

Voila, Apartment Building Private Flood Insurance:

Private flood insurance is simply insurance written by companies other than the federal government.  Flood Insurance not backed up by the federal government.  However, most property insurance as in Homeowners, Commercial property is already written by private insurance companies and are also not backed up by the feds.

Private flood has seen steady growth in the past five or so years.  Now it is offered for Commercial Apartment buildings as well as private homes.   Since many apartments can be required to carry the $500,000 maximum limit, rather than the $250,000 for homes, the cost savings can be even greater.

Apartment Building Private Flood Insurance

How is Private Flood Insurance Different:

Apartment Building Private Flood Insurance is different in a couple of ways:

  1.  Not Backed up by the federal government.
  2.  It may or may not be built on the same coverage form.   The definitions may be different.  Claims may be different.
  3.  Not required to accept every applicant.  Actually NFIP policies are also not required to take everyone either, however they take almost everyone.  Private flood insurers do not.
  4.  Private flood insurers are not necessarily required to offer renewals each and every year.   After a particularly bad year, a private flood insurer may just start to issue non renewals.
  5.  Some mortgage banks may NOT take certain private flood policies.  You need to call and ask.  This is less of an issue now than it was a few years ago.
  6.  Private Flood Insurance may NOT require an elevation certificate in a situation where the NFIP does require it.  Although technically possible that the reverse could be true, I have never seen it.
  7. No current flood insurance, closing wait time.  With typical NFIP flood insurance a new candidate will usually need to wait 30 days for new policy inception.  (This can be waived if a loan requires flood insurance before this.)
  8. Lack of a grandfathering program with Private flood options.

How is Private Flood Insurance the Same:

Apartment Building Private Flood Insurance is similar in a couple of ways:

  1. Full Pay at inception.
  2. No Binders of Insurance.
  3. The same coverage amounts of $500K for an apartment building structure and limited optional coverage for personal property.
  4. Optional Personal Property covered at Actual Cash value only.
  5. Extremely similar underwriting criteria (but not the exact same): location, flood zone, elevation certificate, loss history, number of flood, foundation, etc.
  6. Similar Occupancy concepts as it relates to the classifications of building.
  7. Similar concept of a flood.   Meaning coverage for an aggregation of natural water, not from leaky pipes, or rain coming into the structure.  There ‘may’ be a variations of the exact definition.

Of note with these similarities and differences.  These are based on my experience selling both NFIP and Private Market flood insurance in California.  It is of course possible that other private market flood insurance policies exist that I have not seen and or reviewed which could be different than these.

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Should you purchase a Private Flood Insurance Policy for an Apartment Building?

Should you consider it?  Sure.  Should you purchase it?  It depends.

In order to make just about any insurance recommendation, we know where we are starting from.  Are you deeply grandfathered into the NFIP program?   Have your rates been going way up?  Do you have an elevation certificate?  Have you been newly mapped into a high risk flood zone?   What are you current rates?  You building characteristics and claims history.   We would want to run the numbers for the apartment building numbers to get a full handle on your options.  Can the private flood insurance policy save you money?  Over the short term and long term?

Thank you for reading Apartment Building Private Flood Insurance.

Why you Need an Experienced Agent to Suggest Various Private Flood Options for your Commercial Building:

You will notice in the Different/Same section I used some general terms to qualify.  That is because not all private flood insurance is the exact same.  Unlike NFIP policies which are.  I have a couple of vendors that I have used over the years.  One of which, basically has the same insurance policy as the NFIP, but it is not backed up by FEMA.  Another vendor, ahs a different set of rules qualifying what is and is not considered a flood.  One of them is more restrictive of entry, more limited definition, but often the least expensive  Another is much more open to whom they will accept.  Some agents may have no experience selling these policies and other agents experience with only one.

Commercial Private Flood Insurance

Other Considerations:

In some states the only private flood insurance option that may be available to you is Non Admitted in nature.  You will want to speak with your licensed agent in your jurisdiction about this.  Since we only write flood insurance in California, we would walk you through this and explain it all to you.   For more about flood insurance read All About Flood Insurance in California.

Marindependent Insurance Services LLC – 0K10734 – 415-294-5454.  A California Independent Flood Insurance Agency.   We are P&C licensed exclusively in California.