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FEMA flood insurance: what you need to know

First of all, it is known that storms and hurricanes are a constant danger for a number of states in the federation. What many people do not know is that these risks make it necessary to make a FEMA (Federal Emergency Management Agency) flood insurance.

In fact, floods have the potential to cause hundreds of millions, and even billions of dollars in damage each year. 

But many people involved with the real estate market hardly know about the existence of this insurance and do not know the real importance of it.

After all, the damage caused by floods can cause very large financial losses which can put your entire success in the real estate market at risk.

In addition, it must be considered that many lenders require such insurance to grant the loans, especially when it comes to the mortgage on the house. It is especially important to consider this point if you are a cash buyer.

Therefore, a policy with the National Flood Insurance Program (NFIP) is one of the best tools available to protect your home, business and property.

Requirement for loans

Generally, flood insurance is optional for homeowners in areas that are considered low risk. 

For owners who mortgage in areas with high flood risk, this may even be optional, depending on the type of loan.

However, if the owner purchases a mortgage from a federally insured or regulated financial institution and is in a high-risk flood area, the owner must do FEMA flood insurance for the most part.

After all, when someone takes out a mortgage, if the debtor does not pay the mortgage, the house will be used as collateral.

When financing a property, the creditor usually owns more property than the debtor. If one of the donor’s assets is damaged by the flood and the borrower leaves the house and fails to pay the mortgage, the donor will lose out.

Thus, to eliminate this risk, many lenders demand that owners buy flood insurance. If the flood damages or destroys the house, flood insurance will provide funds to repair or rebuild the house.

If the owner has to make a claim, he will be responsible only for the payment of the franchise. As a result, the owner will keep the house and continue to make the mortgage payment, and everyone will be happy.

Therefore, flood insurance offers benefits not only for those who receive the loan but also for those who lend the money.

Pre-requirements to have flood insurance

A NFIP flood insurance policy is your best protection against flood losses.

In this context, the deadline for a new NFIP policy to come into force is 30 days. To qualify for flood insurance, your home or business must be located in a community that has joined NFIP.

In addition, your community must have agreed to adopt and apply strict floodplain management rules and regulations that meet FEMA’s requirements to reduce the risks and consequences of severe flooding.

Then, in return for efforts to reduce a community’s flood risk, policyholders can receive reduced flood insurance premiums for buildings in the community.

There are more than 22 thousand communities that have implemented floodplain management measures and participate in the NFIP.

However, before taking out an insurance policy, make sure that the community where your home is located has a relationship with NFIP.

Make FEMA flood insurance and avoid further losses

FEMA flood insurance

If your home or business is located in a floodplain or has suffered flood damage as a result of a major disaster and needs federal assistance, you may be at risk of future repetition of losses.

Homeowners who receive federal disaster relief must obtain flood insurance at the home address, even if the damaged property has been replaced with a new one.

If you sell your home, federal law requires that new owners be informed that the property must maintain flood insurance. Often, an existing flood insurance policy can be transferred to a new homeowner with no lapse in coverage. 

Finally, if you are a tenant and receive federal disaster relief, flood insurance coverage must be maintained for as long as you live in the rented property damaged by the flood. The flood insurance requirement is revoked when you move out.

Protection for your home and property

First, the basic item of coverage in residential insurance is Dwelling Coverage – coverage of the physical structure of property.

From there there are numerous covers that can be added, including:

  • Other Structures Coverage – covering of additional structures that are not connected to the body of the property, such as a building, swimming pool or wall;
  • Contents Coverage – coverage of personal items, furniture, electronics and household appliances;
  • Loss of Use – covers additional expenses with stay and food in case it is necessary to leave the property while the repairs are carried out;
  • Personal Liability – Each Occurrence / M. Medical – coverage that covers accidents caused to third parties within the property
  • Theft Coverage;
  • Wind/Hail Screened Encl & Carport Coverage – coverage against wind damage to external structures.
  • Flood Insurance – Flood and flood coverage.

In this sense, flood insurance is available to property owners, entrepreneurs and tenants.

Thus, the policies offer coverage up to $250,000 for homeowners, up to $100,000 for personal property and up to $500,000 each for commercial content and home repairs.

Flood insurance protects two types of property. The first covers your property, the second covers your assets. None covers the land they occupy.

Property coverage includes:

  • Insured building and its foundation;
  • Electrical system and plumbing;
  • Central air conditioning equipment, ovens and water heaters;
  • Refrigerators, kitchen stoves and built-in appliances such as dishwashers; – Carpet permanently installed on unfinished floors.

The coverage of goods includes:

Clothes, curtains, furniture and electronic equipment;

Portable items such as; air conditioners for windows, microwave and dishwashers;

– Carpet not included in the property cover.

How much does FEMA flood insurance cost

Before setting prices it is necessary to remember that the risk of flooding is quite variable from place to place.

Thus, there are areas of high, medium and high risk of flooding. This implies considerable differences in the price of insurance.

NFIP is managed by FEMA whose flood insurance ranges from $573 to $1,395 per year.

In this sense, these rates depend on many factors, including the date and type of construction of your property, along with the level of risk of your property.

FEMA works directly with over 80 property and accident insurance companies to provide flood insurance to property owners, tenants, and business owners.

In addition, fees are set at the national level and do not change from company to company or agent to agent.

We at BR Capital USA recommend that owners who already have a flood insurance policy check their policies annually, update as necessary and make sure the premiums are paid.

Conclusion

In short, knowing about the real chances that your property has to suffer flooding will make you make a clearer decision about whether to make insurance or not.

Hence, do not forget that flood damage can be catastrophic to your budget because it can compromise the structural part of the property.

Therefore, insurance can be much more than a necessity to get a loan, but above all a measure to protect you and mitigate financial risks.

Be sure to check the FEMA maps that show the areas most susceptible to flooding. If your property is located in a low risk region, know that the chance of it being affected by such an incident is less than 1%.

Also, be sure to consult with your real estate agent to be aware of the recommendation of any additional insurance specific to the region of your property.

We at BR Capital USA are fully aware that FEMA flood insurance helps foster a safe and organized environment for the American real estate market.

However, we also recognize that many stakeholders in this market are unaware of the requirements and needs of each location where they intend to establish real estate negotiations.

Because of this difficulty, we decided to create our iBuyer that will make the whole process easier for you. Our mission is to facilitate interactions between all parties involved in the real estate market and make them increasingly fair, ethical and responsible.

So, if you’re looking for convenience and security to close profitable deals and leverage your property income, we can help you!

CLICK HERE AND KNOW MORE ABOUT US.

 

 

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