As a buyer you should expect a realtor to disclose whether the existing flood insurance policy is transferrable. Continuous coverage on the property translates into a less expensive premium for the new homeowner. You should be given a copy of the policy with the elevation certificate.
When you purchase a home located in a flood zone “PLEASE” be aware your annual flood premium cost may differ from the existing home owner as well as the immediate neighbors.
Allow me to provide you with a recent example:
Home owner #1 bought a direct ocean front property –
annual flood premium $2,500.
Home owner #2 (200 yards away) also direct ocean front –
annual flood premium $800.
Home owner #2 convinced homeowner #1 they were paying far too much for their flood insurance!!
The new homeowners called their carrier very upset, absolutely convinced they were being overcharged. They brought a copy of the neighbors flood policy to the carrier to plead their case.
When the carrier looked closer at the less expensive policy several key items were discovered:
- The cheaper policy was the absolute bare minimum coverage with the highest deductible. The amount would never cover significant loss or replacement, with no coverage for the contents.
- The homeowners paid cash for their property. This provides them with the option to carry no flood insurance OR not enough to cover for a loss. A risk they were willing to take. *If you have a mortgage the bank requires the homeowner to carry adequate flood Insurance, the asset must be protected.
- The less expensive flood policy was also covering a property that was significantly smaller, at a different elevation, on a smaller lot.
The moral of this story, you get what you pay for!!
If homeowner #1 suffers significant storm damage, his home and it’s contents are not covered. But he does pay a very low annual flood premium.
In homeowner #2 suffers storm damage he has the proper coverage for repair/replacement and contents.
Flood premium costs vary greatly depending on many factors. The coverage details should be discussed with your insurance carrier to make sure you are not underpaying OR overpaying.
*I always strongly recommend you get a second opinion from a carrier that is known for specializing in flood coverage. “A second look” has resulted in significant savings for my clients over the years. Please reach out to me anytime for a recommendation.
