Flood insurance?

[Koronin]

Where we used to live (I did own the home) we were in a 500 year flood plain. The 100 year flood plain was on part of our property, but not where the structure was, so we choose to not carry flood insurance. If it was in the 100 yr flood plain my mortgage lender (Bank of America) actually would have required it. We are currently in the process of purchasing a home with a VA loan and they are not requiring flood insurance either. The home we are purchasing is not in a 100 year flood plain and is about 30 or so miles inland from the ocean. Now due to location (coastal county) the VA and the lender both require wind and hail insurance.

[bmccasland]

If your house and contents are damaged by rising water (a flood), then your homeowner's insurance will NOT pay. You do not need a federally backed loan (VA or FHA) to buy flood insurance. Whoever told you that didn't know what they're talking about. Flood is based on your risk area. Unless you happen to live on the high bank and know your home really is out of the 100 year flood plain, then you should get it. Also depending on your risk area, it may not be that much, or it can be as high as your homeowner's policy (which is what I paid living at -3.5 ft in the New Orleans area). Also 100-yr flood risk means that on average that bubbly creek will flood once every 100 years - but it could actually flood this year and the next year and the next year. Then not flood again for 200 years.

If you want to bear the complete recovery cost of a rising water / flood event, including loosing everything you own, then skip the insurance. Otherwise, buy flood insurance. It is a common misconception that homeowner's will cover flooding - it doesn't.

As to high-wind events, including those living in tornado alley - many homeowner's policies are requiring riders for high-wind or hail damage, an addition to your normal homeowner's policy. If you opt out of the rider, then have a high-wind event (tornado, hurricane), you may discover you're also out in the cold. Insurance companies exist to make money it seems.

[Koronin]

It's also the coastal areas for hurricanes, hence the reason we are required to have wind and hail coverage while we have a mortgage even though this area is extremely unlikely to be hit by a hurricane. Also being in a coastal county we cannot get a low deductable insurance plan like we had near Charlotte. Our deductible will be 3 times what it was there (lowest we can get here) plus an additional deductable for any named storm (done by percentage). Actually both our Realtor and insurance agent pulled checked to see if the property we're buying is in a flood zone, and it is not listed as being in one.
As bmccasland stated flood damage is not covered by regular home owner's insurance policies. Now if you live in a coastal county and buy a home on the beach, good luck find a private insurance company to issue wind and hail as well as flood, esp if it's a rental property. If it's a primary residence you might be able to get it depending on which insurance company you're dealing with.

[OakLeaf]

even though this area is extremely unlikely to be hit by a hurricane

Yeah, so is our area. Everyone told us the way the Gulf Stream runs, hurricanes don't hit here. We got three in '04, the year after we bought the house.

We lost roof and carpet that needed to be replaced anyway, and the insurance got to pay for it (as well as new paint in the bedroom that I hated the color).

[Koronin]

OakLeaf, I totally get that part. It would so not surprise me to have something crazy happen here this summer since we're in the process of buying right now. Truthfully it's not the wind and hail coverage that actually is annoying me about the whole insurance thing in a coastal county, it's the extra deductable for a named storm on top of the high dedcutable that is required in a coastal county to start with.
Well at least you got new paint to repaint a room you didn't like the color of to begin with, but otherwise that is terrible that it happened within a year of buying the house.
For us the hurricane is unlikely due to the way the coast goes inward right here before going back out. We're in Jacksonville, NC, and if you look at a map there is an area of the NC coast that curves west before going back to the east and north. Everyone keeps telling me that if it's not a direct hit the only place that gets much other than some major rain and wind is the coast. It has to be a direct hit to do real damage away from the coast.

[Cataboo]

I think with climate change, a lot of predictions of when flooding or storms will happen won't be too accurate.

[Mr. Bloom]

Indy, the facts are in conflict with my understanding/experience on the issues.

On one hand, I believe the flood insurance requirement extends to federally insured institutions, not federally insured transactions. And, guessing who your originating lender was, I think this rule would have applied to them unless you were outside the flood plain. So, consistent with your experience and observation, I don't think you're in the 100 yr flood plain.

But, if this is true, then the premium seems awfully high. In the past, I lived on the edge of a flood plain (part of my very flat yard was in the plain) and there was a voluntary program...but the premium was no where near that high...but that was 10+ yrs ago.

So, two facts in conflict - it's likely you're not in the flood plain, but it seems you're being quoted a premium that is...

So, I'm wondering if the rate was quoted to you without a specific review of the flood maps??? Do you have a survey showing the structure is outside Zone A? What would the premium be if you were in the flood plain?

But, in any event, I'd still get it. Development changes storm water flows and municipal planning can't always keep up. You're in a developing area... And the flood maps arn't always current either. Being OK this year doesn't mean the same next year...you almost can't afford not to have it...

[indysteel]

Mr. B., I got that number from entering our specific address into FEMA's Floodsmart website. It indicates that our address is in a "high risk" area. Beyond that, I don't really have much information. There's also conflicting information as to when you will be required to get insurance. In one part, it says that it's required for any lender that is federally insured. Presumably, that means any FDIC-insured bank. In another part, it refers to federally insured transactions (I'm paraphrasing), which to me would mean FHA, VA and the like. I read both parts to the Judge yesterday, and he thought it was confusing. Certainly, if I'm eligible for what they call a preferred rate, then the premium would be considerably less, and would be a no brainer, but it would appear that if I'm eligible for the insurance, I would be required to pay the higher premium.

Obviously, I need to gather more information. I just wanted to get an initial read on whether the program is run efficiently. I realize I my have little "choice," and I've long understood that my homeowner's insurance would not cover it.

[Mr. Bloom]

Certainly, if I'm eligible for what they call a preferred rate, then the premium would be considerably less, and would be a no brainer.

Understood. The FEMA site deals with the topography of the land, not the elevation of the actual house as it sets on the land. That's where a survey (or the elevation certificate) may come in handy getting you a lower rate... But it's been years since I've dealt with this...and there's a lot of complexity in grey areas like this...

I don't think the program is any slower than any other insurer. If you do turn out to be a preferred risk, I think you can actually purchase it directly through your own insurer

[frostflakes]

So helpful to read everyone's comments in this threads - thanks for sharing all! I'll also add in my two cents, read an excellent article on flood insurance - http://www.gettingmoneywise.com/2011...insurance.html about when you actually need it and when it's not all that necessary. Hope that helps anyone else out who's still looking for info

[Biciclista]

if your house and contents are damaged by rising water (a flood), then your homeowner's insurance will not pay. You do not need a federally backed loan (va or fha) to buy flood insurance. Whoever told you that didn't know what they're talking about. Flood is based on your risk area. Unless you happen to live on the high bank and know your home really is out of the 100 year flood plain, then you should get it. Also depending on your risk area, it may not be that much, or it can be as high as your homeowner's policy (which is what i paid living at -3.5 ft in the new orleans area). Also 100-yr flood risk means that on average that bubbly creek will flood once every 100 years - but it could actually flood this year and the next year and the next year. Then not flood again for 200 years.

If you want to bear the complete recovery cost of a rising water / flood event, including loosing everything you own, then skip the insurance. Otherwise, buy flood insurance. it is a common misconception that homeowner's will cover flooding - it doesn't.

As to high-wind events, including those living in tornado alley - many homeowner's policies are requiring riders for high-wind or hail damage, an addition to your normal homeowner's policy. If you opt out of the rider, then have a high-wind event (tornado, hurricane), you may discover you're also out in the cold. Insurance companies exist to make money it seems.

read this one

[indysteel]

read this one

Thanks, I did. To answer the points made in that post:

I do appreciate that my homeowner's insurance will not cover a flood. I've long known and understood that since first becoming a homeowner in 2002.

If my homeowner's insurer is requiring a rider for high wind or hail, I am unaware of it. We certainly haven't declined a request to carry such a rider.

As for the connection between flood insurance and FHA and VA loans, I'm merely trying to intepret FEMA's own website to the extent that it says that flood insurance is required for federally insured lenders. It was not clear from the website whether this meant that it was required on any loan issued by federally insured lender or whether it merely applied to federally backed loans. FEMA's own website offers conflicting statements in this regard. I was merely trying to understand why we were not required to get flood insurance when we took out or mortgage given that FEMA states that we live in a high risk area. It seemed to me that one of two things could explain that: either our loan was not subject to forced flood insurance or our property was not subject to the requirement.

I welcome you to look at FEMA's Floodsmart website. Perhaps youi'll better appreciate that they make all of this clear as mud. Maybe it is readily understandable, and I'm just stupid.

But I doubt it.