Two years ago FEMA went out and started surveying and plotting our New Hampshire lakes to determine if local properties were in danger of flooding. They teamed up with the National Flood Insurance Program. This has turn into somewhat of a difficult situation for buyers and sellers this year. Our local real estate board has all sellers fill out a disclosure and one of the questions is? Flood Zone? Yes / No / Unknown. You would think that the home owner would be aware that they are in a flood zone considering that the government sets the insurance rate and the typical home flood insurance coverage cost is somewhere between $2000 and $5000.
Sellers don't have a clue! I worked with three buyers this year and on the disclosure " no " was checked for being in the flood zone. The sellers had never paid for flood insurance and they were never notified by there insurance agent or mortgage company they were in a flood zone. The new buyers were notified by the mortgage company that they needed flood insurance and the average cost for the year was $3000 for the flood insurance policy, not including typical coverage. They can buy the insurance anywhere but National Flood Insurance Program. is the only provider . Either you buy it or you will not get the loan.
What can you do? In all 3 of my sales the homes were not at water level and I told them to hire a surveyor to determine if they could get an elevation certificate. With the certificate if granted they could move to a lower scale in the insurance rating or avoid the insurance totally.
I would have to say that in my opinion some of the maps are far from accurate. The above map shows a row of condo's out on a peninsula and these homes are about 6 feet above the water level. The home I was dealing with had only the deck in the flood zone but this home actually sat up on a hill 25 feet above the waterline. My customer joked that the person drew the map with crayons and did no research at all. The buyer had to hire a surveyor to get there new home an elevation certificate to avoid the $2500 insurance premium.
Please note that in Section 15 ( Due Diligence ) in the New Hampshire Purchase and Sales agreement there is a clause to review insurance. The typical agreement has 10 to 15 days to do your Due Diligence. Do it so you are not 2 days from the close stuck with an extra $3000 bill that may have been avoided by asking your insurance agent if your new lakefront purchase is in a flood zone.
Below are some additional questions from the National Flood Insurance Program taken from their website. http://www.floodsmart.gov/floodsmart
To be proactive about your insurance, you should ask your insurance agent the following questions:
- What flood zone do I live in? What is my property's flood risk?
- Is flood insurance mandatory for my property? Will the lender require it?
- Even if flood insurance isn't required by my lender, do I still need it?
- Do I qualify for a Preferred Risk Policy?
- Does my community participate in the NFIP Community Rating System (CRS)? If so, does my home qualify for a CRS rating discount?
- What will and won't be covered against flood damage?
- Will my flood insurance policy be backed by the federal government?
- How much coverage should I get for my building and for my contents?
- What options do I have to reduce my premium?
- Are there additional expenses or agency fees I should be aware of?
- Will my policy provide Replacement Cost Value or Actual Cash Value? And what is the difference between the two?
- Who should I call if I have a flood claim?
- How can I pay for my policy?
- How will my policy be renewed?
Original post and more information can be found on FloodSmart.gov
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