Home Flood Insurance For New Homeowners

A new homeowner that lives in a designated flood zone should consider the purchase of home flood insurance. Some mortgage lenders require flood insurance for homeowners who live in an area that is prone to frequent flooding. It provides the lender with comfort in the event that a home is either destroyed or severely damaged due to a flood.

Federal Flood Insurance Program

Flood insurance is add-on coverage that is not part of a traditional homeowner policy. The U.S. government through the Federal Flood Insurance program guarantees flood insurance. The Federal Emergency Management Administration or FEMA administers the program. The guarantee allows insurance companies to offer flood insurance protection to those homeowners in need of the coverage.

Where to Buy Flood Insurance

A homeowner who resides in a designated flood zone contacts an insurer or may go through their lender for information on the flood insurance program. Premiums that a homeowner pays are based on an assessment of the risk for flooding in the area and the mortgage amount of the home. The coverage provides an indemnity amount or reimbursement for the amount of damage that a home sustains during a flood based on the actual or fair market value of the home and its contents.

Required to Buy Flood Insurance

Home flood insurance is not required of all new homeowners. This is why this type of protection is not included in a traditional homeowner insurance policy. Flood insurance covers the risks associated with flooding that result in a loss to the homeowner. Areas of the country that are not near water and not subject to the risk of flooding are less likely to have a need for home flood insurance.

What to Watch For

The new homeowner should be leery of agents and lenders that require flood insurance for a home that is in a no or low risk area. Such offers do not provide a benefit to the homeowner and serves to increase premium costs for the homeowner and increase commissions for the agent. FEMA publishes guidelines for the flood insurance program and the requirements for buying coverage. This information is available online and through your lender and gives the new homeowner a sense of what areas are required to maintain coverage.

A new homeowner should educate themselves on the requirement for flood insurance in their area. Unscrupulous agents who sell these plans without regard to the need or necessity for flood insurance should be reported to a state insurance commission for disciplinary actions. Flood insurance protection is important for new homeowners who face a real risk of loss that can be caused by flooding.

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