Excess Flood Insurance
Excess flood insurance provides flood coverage above the limits of the NFIP policy, allowing apartment buildings to insure their full replacement cost against flood damage.
Excess flood insurance sits above the NFIP coverage and provides additional limits up to the full replacement cost of the building. Since the NFIP caps commercial building coverage at $500,000, which is far below the replacement cost of most apartment properties, excess flood coverage is essential for any property that faces meaningful flood exposure.
Excess flood policies are available from private insurance carriers and can be structured to provide coverage only after the NFIP limits are exhausted. The coverage terms may be broader than the NFIP policy in some respects, including coverage for loss of rents, basement improvements, and other items that the NFIP handles differently. Private flood policies that replace the NFIP entirely, rather than sitting above it, are also available and may offer better terms or pricing for certain properties.
The cost of excess flood coverage depends on the property's flood zone designation, elevation relative to the base flood elevation, building construction, and the amount of coverage needed. For apartment properties in high-risk flood zones, the cost can be significant, but it must be weighed against the potential financial impact of an uninsured flood loss that could cost millions of dollars to repair.