The Home Buyer's Korner

Information presented should be used for educational purposes only.

September 25th, 2015

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Flood Insurance

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So you’ve got home owners insurance and assume your property is covered for any mother nature throws at you, well not so fast. Not all homeowners are aware that home owner’s insurance doesn’t cover damage related to a flood.  If your property is located in a flood zone you and your lender will want your home to be covered by flood insurance.

Floods these days are one of the most common hazards in the US, costing billions of dollars in damage to homes and other properties annually. Flood insurance policies are commonly made available to homeowners in flood-prone areas.

The majority of home owner’s insurance policies cover some form of water damage, from leaking faucets to burst water pipes. However, home owner’s insurance doesn’t cover water damage resulting from flooding of rivers or sewers that cause water to ruin a home.

Specific flood protection is provided by the National Flood Insurance Program (NFIP), which is run by the Federal Emergency Management Agency (FEMA). Standard flood insurance policies cover “direct physical damage” to a home resulting from floods. A separate policy often must be purchased to protect the belongings inside the home. Homeowners can normally buy up to $250,000 in coverage for the home, and up to $100,000 in coverage for possessions and even renters are permitted to purchase flood insurance to cover their possessions.

Flood insurance isn’t sold by FEMA directly but sold to customers through private insurance agencies. Premium rates are determined by the government and they remain consistent from one insurer to the next.

How much a homeowner pays for their own specific flood insurance depends on a number of factors, including how prone the neighborhood is for floods and how much coverage a homeowner wants.

If life throws you a curve ball and you need to file a claim, it’s much like any other insurance claim. Once you file a claim the damage will be analyzed by an adjuster assigned by the insurance company. A “proof of loss” form will need to be filled out and submitted to the insurer normally within 60 days of the flood occurrence.

It’s necessary to find out if your home is eligible for flood insurance before buying and if you need it. For a home to be eligible the community needs to enforce floodplain statutes to lessen the chances of flood damage and FEMA ensures that such regulations are followed. Only those homes in a community that participates in NFIP can buy insurance – today, about 20,000 communities across the country participate in this program.

FEMA offers maps that outline what areas are at high risk for floods and those that are at moderate-to-low risk. The law requires homeowners to have flood insurance if the properties are located in a high-risk zone and have a federally-backed mortgage. This is because properties located in these high-risk areas have a 26 percent chance of suffering flood damage during the 30 years that it would take to pay off a mortgage.

Homeowners are not required to buy flood insurance if they reside in a moderate-to-low-risk zone, though it may be a good idea to purchase it anyway and the cost is relatively low compared to the risk. Homes and other properties outside high-risk areas make up over 20 percent of NFIP claims.

Bottom line, even if you don’t live in a high-risk zone, it doesn’t mean your home won’t ever get flooded. Consider wisely if you’re given the option to purchase flood insurance or not.

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TENNESSEE HOME OWNERSHIP TOOLS

Your Home Purchasing or Refinancing & Renovation Tools,

Home Improvements, Home Renovations,

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase.

Here are just a few of the home improvements

you might consider with any Home Renovation loan

Repair or replace a roof

Install, replace or repair gutters and downspouts

Replace, repair or upgrade your HVAC system

Repair or replace plumbing

Install, repair or replace electrical systems

Kitchen remodeling (including the purchase and installation of appliances)

Bathroom remodeling, Full interior painting, Total exterior painting

Repair or replace a septic system and/or well

Disability access (wheelchair ramp, elevator, widen doorways)

Build, repair or replace deck, patio or porch

Basement waterproofing and finishing

Abatement/Stabilization of lead-based paint hazards

Replace old windows, Room additions, Finish an attic

Add a second story to your home

Replace a termite damaged sill plate (a water-damaged sill plate also)

Possible landscaping items such as correction of grading & drainage problems,

tree removal, repair a driveway and sidewalks

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Great for Real Estate Investors and Second Home Renovations

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Up to $10K for Home Improvements, Renovations or a Simple Remodel

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A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process.

This simple home inspection tool makes your ultimate buying decision a smart one.

To print this document click on “Open in New Window” located at the lower right corner;

click on “File”; then click on “Print”. In the center of the screen you will

have the option to “Create A Printable PDF of the Presentation”.

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