Flood Insurance Catch 22 - Lesson Learned

[Kevin Dickson]

We have a rental house in Jamestown, CO., which was flooded two weeks ago. Our house was fine, but all utilities are off and all the roads were washed out.

So now it's worthless as a rental house, but I'm not aware of any insurance we could have bought to cover this eventuality. It could take up to a year to restore the roads. Most business owner insurance policies have a lost rent clause, but only if the lost rent was due to a covered event. We couldn't have bought flood insurance even if we wanted it, and flood insurance won't cover us because there's no damage to our house.

Jamestown will likely recover, and home prices will recover because it's a desirable place to live, being a short drive up a canyon from Boulder. The lesson is that towns sited in narrow canyons can flood and wipe out your rental income even if you have full insurance coverage and a flood proof house.