Help minamizing flood insurance cost

[Gilbert Lugo]

hello everyone, 

I’m at my final phase of closing on my first property(multiplex). After doing my analysis, crunching number, and due diligence I get hit with flood insurance which has been on heard of for my location. I’ve asked around and a lot of property even close to the water don’t seem to have it but since the appraiser said that I need it the mortagage company requires it. 

That being said the extra insurance will be hurting my cash flow. Is there anything that I can do to remedy the hit of having to get flood insurance? Also i was told since it’s a multiplex I have to pay the upper premium?

Thank you in advance for your advise. 

[John Mocker]

Gilbert,

Up until recently, 99% of flood insurance was written through the National Flood Insurance Program (NFIP).  The rates are standardized and broke up by type of building (residential, commercial, condo), flood zone, elevation, and other factors.  If your property is more than 4 families it will go on the General Form.   You can insure up to $500,000 coverage for the building.   Your Mortgage company will generally require that you show coverage up to the amount of the loan. 

Some things you can do to lessen the cost:

- there are some Non NFIP programs (private flood insurance).  Have your agent check them as well

- check to see if there is a survey of the property to determine the elevation of the lowest floor.  If not, check to

   see if there are any potential savings by doing a survey (approx. $700)

- Find out if the property was in a lesser flood zone and was changed recently.   There may by some

  grandfathering in of prior rate that you can take advantage of

- if you have to take the NFIP policy, check on all deductibles.  The savings on the higher deductibles may help

Hope this was helpful