There are a lot of things to consider when buying a home. Flood insurance should be one of them. First off… EVERY home is in a flood zone. Some zones are higher risk than others. If you are in a Special Flood Hazard Area, you would be required to purchase flood insurance by your mortgage company. Even if you do not have a mortgage or your bank does not require you to buy flood insurance, you should consider the possible risk. If you are in a low-lying area, near a stream or river or right on the ocean, you should think about purchasing flood insurance. Remember, 20-25% of all flood claims are not in a special flood hazard area and the average flood claim is over $50,000!
Some considerations are what is the actual risk of the home flooding? How near to the water is the home? What is the elevation of the home? Does it have a full basement, crawlspace, slab or are you built up on piers or columns? The construction of your home has a big impact on flood rates. We can advise you as to which flood zone your property is in. We have software that can tell us exactly what the elevation of the house is and what the potential of your home sustaining a flood is.
You should inquire with the seller or the seller’s realtor if the property has been flooded in the past. This will give you some idea as to whether to buy the house. If it is in a low, flood-prone area, you may want to think twice about it. Sure, you can get flood insurance, but do you really want a house that floods frequently?
How will it affect my resale value? If you are looking at a home in a Special Flood Hazard Area, ask the seller or the seller’s realtor if they currently have a flood policy on the property. If they do, is the policy grandfathered into a lower flood zone? If it is, you may want to consider keeping their policy. All National Flood Insurance Program (NFIP) policies are transferable to a new owner. Even though the policy is grandfathered, you may still be able to get a lower premium in the private market. If you choose to purchase a private market policy to protect your home, it is NOT transferable like an NFIP policy. But from a resale standpoint, any prospective buyer will want to see how much a flood insurance policy is going to cost. Even though they are not transferable, we can write a new policy for a buyer for similar pricing.
Another important thing to ask is if the seller has an Elevation Certificate on the property. Chances are if the property was built after 1976, there is an Elevation Certificate on file. If the seller can’t find a copy, the building department may have a copy on record from when the property was built. If the property was built after 1976, in order to get an NFIP flood quote, they would require an Elevation Certificate to get a quote. This is NOT the case in the Private Market! We do NOT need an elevation certificate to quote a flood policy in the private market. HOWEVER, an elevation certificate could help to lower the rate.
There are also many things you can do to mitigate a flood hazard. Does the property have a sea wall? Is there anything between you and the ocean to slow or stop flood waters? Does the home have flood vents or break-away walls? Where are the utility services located? Are they in the basement, crawlspace or on the first floor? Are they elevated up? All of this information can be found on the elevation certificate.
Typical Flood Vent
Know what you are getting yourself into BEFORE you make an offer on a home. You will find that the premiums in the private market are 25-75% less than NFIP! Call us to get a sample homeowners and flood insurance quote.
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