Flood Insurance is not part of Your Basic Property Insurance

TamlynBuyer Info

Property Insurance, also known as Hazard Insurance or Home Owner’s Insurance, is required by your lender when you get a home mortgage loan.  I have written an article on this site covering  the basics of  Hazard Insurance. (Titled: Home Owner’s Insurance) If you are obtaining a Gov’t secured loan, FHA, VA, Freddie Mac or Fannie Mae you will be required to get flood insurance in addition to the Home Owner’s Insurance. Some lenders will require it even if you are getting a Conventional loan.

I wanted to write a little more about Flood Insurance because it comes up from time to time in conversations about buying a home in the Denver area.  It surprises many people that there is a requirement for flood insurance in some areas of Colorado.  Flood Insurance is a separate insurance policy purchased through FEMA and your insurance provider can assist you with getting this additional policy. The price of the policy varies according to several factors but if  your home is in a HIGH RISK area it can add somewhere between $50 to $100 or more to your monthly mortgage payment.  This can obviously affect the decision of what home to purchase it you are watching your monthly budget or your lender is watching your monthly ratios.

To see if the home you are interested in is in a high risk area go to http://www.floodsmart.gov and put in the address of the home and select  yes for Residential. If it says moderate or low you will probably not be required to purchase additional Flood Insurance.

You can go here to get more information from the National Flood Insurance Program (NFIP) http://www.fema.gov/business/nfip/ to read their FAQ.