You may be required to have separate flood insurance above water damage in your homeowners or tenants
Many tenants and homeowners discover the importance of having separate flood insurance for their property and personal belongings and making the cautious decision to purchase it. But some are surprised that flood insurance can actually be required of them to secure a loan.
Who is obliged to have flood protection?
Federal law mandates that all federal or federal financial support for buying or building A building in high-risk flood areas is covered by flood insurance. This means that a federally insured bank or lender will require you to purchase flood insurance if you are in an area more likely to be flooded.
The amount of flood insurance you need based on the 1
- The maximum NFIP coverage available for the specific property type,
- The outstanding outstanding balance of the loan or  The insurance value of the structure.
However, property owners in low to moderate risk areas are not completely gone. Federal law cannot require flood insurance, but lenders can do the same on their own because flooding can happen anywhere that has rain and about a quarter of all flood claims come from outside high-risk areas. Your home is the security of your mortgage, so if it is damaged or destroyed in a flood, the lender can make a big financial hit. They usually do not like to take that risk, so they often require you to buy flood insurance to get a home loan.
Things can always change too. If during a lifetime of a mortgage a flood plan is exceeded, your lender can call you and say that you are now in a high-risk area and have to buy flood insurance.
Property owners living in a particular flood risk area (SFHA) or high risk area, which has received federal disaster assistance in the form of a federal grant or loan in the past for flood damage, must have flood insurance as long as they own the building. If they sell it, they must tell the buyer the need to buy and maintain flood insurance. Failure to have the necessary coverage may not involve any federal disaster relief in future damages.
But not all sellers need to reveal flood risks or past flood damage – only those who have received federal disaster relief in a high-risk area. So if you buy a house, you do not automatically assume that the seller or agent will tell you about previous flood damage or river zone designation.
Am I entitled to flood insurance?
Most likely, yes. Even if your home is flooded in the past, you can still buy flood insurance if your community participates in the National Flood Insurance Program (NFIP). Most communities in the US who also have a lower risk of flooding participate, but check on the FEMA website or with your insurance agent to find out if your doing.
If you live somewhere that participates in the NFIP program, you are eligible for flood insurance to cover your home or business, including rentals. You can even qualify for the Preferred Risk Policy, which is a cheaper flood insurance for real estate located outside the high-risk flood areas. Your property does not have to be located in a flood platform to qualify for flood insurance, but it helps to know your level of risk and whether you qualify for discounts or if you are required by law to have flood insurance. 19659013] How To Know If You Are In A River Plain
FEMA provides several types of maps and tools that indicate risk levels, floods and SFHAs based on your location. One particularly useful is the FEMA Flood Map Service Center, which provides state-identified flood zone information when entering your address. These maps are constantly updated, so it is important to regularly check whether you are taking flood insurance or moving property decisions.
Another mapping option, floodtools.com, offers visually intuitive, color-coded flood risk indicators, educational resources, and community benchmarks. This is an interactive tool that can be useful to show exactly where historical flooding has occurred, average claims in your area and how your property is at risk.
Whether your property is landing in the midst of a high-risk SFHA or has not seen a flood of more than 50 years, you should still talk to your flood insurance insurance agent. If you are somewhere near when rainstorms happen, you are in danger.
The Independent Insurance Advisers at Hill & Hamilton are well known on the river basins, coverage options, and requirements. If you have questions, we are happy to have a discussion to get you comfortable with the flood insurance efforts and help you make the decisions that suit you. Contact us today for more information.