August 19th, 2012 3:01 PM by Taydus Taydus, AHWD, CNE, CRS, GRI
Flood insurance can seem like an enigma to many people who either knowingly or unknowinly purchase a home in a flood zone. Your Realtor and / or your lender should let you know if the home you intend to purchase is in a flood zone (or not) and if it will require you to secure flood insurance long before you reach the closing table.
Nancy DeLaCroix with MetLife Auto & Home and LIFE! Rencently sent out the below newsletter that I felt explained the whole flood insurance mystery quite well :) The newsletter is written for Realtors, but homeowners and future homeowners alike will find the information valuable if your current home or future home is in a flood zone:
It’s been a while since I discussed Flood Insurance so I think I will touch on that again.
It is so important for the Real Estate agent to determine flood zone right as you are setting up your showings for the customer. Flood insurance is so expensive for required high risk areas that it can effect qualification quickly. The lower end is about $1,400 or $1,500 a year which increases monthly obligations by about $125 a month. That can definitely have an adverse effect.
Here are some tips about Flood Insurance. There are required high risk flood zones and preferred flood zones, however every property is in a flood zone of some type. About 30% of all claims come from preferred flood zones, before you think your customer does not need this coverage. Preferred is much less expensive, about half of the high risk premium.
Flood insurance is different than most types of homeowners. It is collected on an annual basis only. It can be escrowed within a payment and it is not refundable. If your customer sells the property that money is gone.
The deductible options are higher than normal homeowners. The low end is $1,000 and the upper end is $5,000. Make sure your customer has those funds in reserves and can pay it if they need to.
Flood is a single peril policy. It only covers flood damage.
Flood Insurance covers 4 items as they are directly affected by the water:
Structural damage
Furnace, water heater and air conditioner
Flood debris cleanup
Contents and personal property.
Anything else needs to be paid from the homeowners policy.
Flood Zones are A, AE, V for high risk = 100 year flood plane
Flood Zones are B, C, X for preferred risk
If you would like to reach Nancy directly to discuss your homeowner's insurance needs (including flood insurance) you can reach her at:
Nancy DeLaCroix
MetLife Auto & Home and LIFE!
direct 720-389-6663
cell 303-506-1020
efax 720-528-7952
fax 720-242-8189
Although Nancy mentions that every property is in a flood zone of some type, keep in mind that not every property will require you to purchase flood insurance. Talk to your Realtor, lender and / or homeowner's insurance agent to find out if you will be required to purchase flood insurance before you buy.