Floods are doubly devastating when homeowners lack insurance
By Kathi Paradis
When a home is flooded, the losses can be devastating. Homeowners in hazard areas should know the limits of their insurance and federal disaster assistance.
Did you know that flooding is the number one disaster in the United States?
It's typically caused by hurricanes, winter snow melt, and even construction that changes water runoff paths. Regardless of the reason, when a home is flooded, the losses can be devastating. Homeowners insurance does not cover flooding in your home or outbuildings. And federal disaster assistance is usually in the form of low-interest loans that must be paid back and will not cover your losses.
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Because of the severe consequences, federal regulations require mortgage lenders to get a Flood Hazard Determination on any property for which they provide financing and that contains a home or building. Based on that report's finding, the person buying the property may be required to purchase flood insurance, separate from their conventional homeowner's insurance.
I'm in a Special Flood Hazard Area. What do I do?
Your mortgage lender is required to tell you if your property is located in a Special Flood Hazard Area. Sometimes, one, but not all, buildings on a property is located in a flood zone. If, for example, the garage is inside the flood hazard area, but the house isn't, you may be required to have flood insurance just for the garage.
If you find that any part of your property is in a flood hazard area, be an informed consumer. Ask your insurance agent what is and isn't covered by a flood insurance policy. Also, ask how your premium is renewed, to make sure you don't have a gap in coverage.
If you don't have a mortgage on your property, it's wise to check with the official in your community who maintains flood hazard information. Some property owners who pay cash or pay off their mortgage prior to a flood map change find out only after a flood that their property is in a hazard area and not covered by their insurance.
I'm not in a Special Flood Hazard Area. Do I need flood insurance?
Over 25% of flood insurance claims each year are for properties that aren't in a flood zone. These claims account for one third of the Federal Disaster Assistance for flooding. Remember the Mother's Day floods back in May 2006? The Suncook River changed its course and flooded many homes—manufactured homes were particularly hard-hit—that were not considered part of a flood zone. A lot of these homes were owned free and clear; their owners didn't know they were at risk of losing their homes and possessions to a flood, or that their homeowners insurance wouldn't protect them.
Again, your insurance agent is your best resource. Flood insurance coverage for properties not in mapped flood hazard areas is very reasonably priced and offers protection if a flood happens.
Kathi Paradis is a Welcome Home Loans Mortgage Loan Originator at the Community Loan Fund.
NMLS #469310. Licensed by the New Hampshire Banking Department.