Most of us learn about floods on the news. Some homeowners learn the hard way when their home and/or neighborhood experiences a flood due to a hurricane, river or similar natural disaster. This isn't when you want to learn that your homeowner insurance policy doesn't cover flooding. Now is the time to see if you really need flood insurance which is a separate policy.
This article was prompted by a letter from my lender. They said my property is in a Special Flood Hazard Area but provided no supporting documentation. I started digging and here's what I've done so far. You simply don't want to start paying $500 to $800 per year, for flood insurance if you might not need!
- Called the lender to request supporting documentation proving my home was located in a high risk flood zone.
- Lender stated Federal Emergency Management Agency (FEMA) told them flood insurance was required for my property. They told me I needed a letter from FEMA stating no flood insurance was required.
- Completed the FEMA application process. The first time through it said I had to pay $425. Now it says, it's free for single family homes. Note: you'll need your home's survey to complete the application (check your closing docs).
Wondering why I went through all these steps? There's a FEMA flood map website that says my house is outside any flood zone, zone X. So it made sense to learn why anyone felt my property needed flood insurance.
- Insurance agent said a flood certificate was needed to get quotes for flood insurance. Alternatively, I could pay $7,600!
- Called engineering (from property survey) firm to ask for a flood certificate (18 page application). They didn't think I needed one and offered to do research for me … thank you! Here's one (of 3) of the maps they sent me.
- Insurance agent shared a “Standard Flood Hazard Determination Form” they received from another insurance company that actually writes flood insurance. This form was provided by CoreLogic Flood Services.
- Called CoreLogic to get a review of their flood determination (zone AE) as it doesn't agree with the local engineer. They requested engineers data which I've forwarded.
- Will send engineering data to new loan processing company once I have their contact info (third change in 6 months).
Do You Really Need Flood Insurance?
There are rules for just about everything, so it's no surprise that you often don't get to decide if you want to buy flood insurance. Of course you can also buy this coverage when it's not required which we did once.
Hurricane Sandy turned left and tore up the New Jersey coastline. If Sandy had continued north instead, we think it would have flooded our condo on the New Hampshire coast … so we bought flood insurance after this. It took a few more years for FEMA to redraw their maps to finally require us to have flood insurance.
Here's when you won't have a choice:
- When you have a mortgage on property in a high-risk flood area, you'll need to buy flood insurance. That's because federally regulated or insured lenders have this requirement. When flood insurance isn't required because your home is in a moderate to low-risk flood area, your lender might still require this insurance.
- If you've received federal disaster assistance following a Presidential Disaster Declaration and live in a high-risk flood zone, you have to maintain flood insurance. If you don't, you won't be able to get federal disaster aid in the future.