Does Your New Home Need Flood Insurance?
Most standard homeowner’s insurance policies do not provide coverage for flooding. But, if you have a mortgage that is backed by the federal government, such as one issued by the Federal Housing Administration (FHA) or guaranteed by the Veterans Administration (VA), then you need to purchase a flood insurance policy if it is determined that your home resides in an area that is prone to flooding.
Even mortgages sold on the secondary market, like those offered by Freddie Mac and Fannie Mae, require a separate flood insurance policy for homes in flood zones.
If you’re unsure whether or not your new home being built by a custom home builder in Georgia needs to be insured for flooding, this guide will offer a little more insight.
Do I Really Need Flood Insurance if My Home is Not in a Flood Zone?
If your new home is not being built in a flood zone, then you won’t be required to carry a flood insurance policy to secure a mortgage. But, this doesn’t mean you shouldn’t have the coverage. Even though certain areas are considered more prone to flooding, the truth is, floods can occur anywhere. And, when they do, they cause an incredible amount of damage.
What many homeowners are surprised to discover, usually after it is too late, is that most homeowner’s insurance policies will cover the damage caused to a home by a hurricane, tornado, or severe storm, but they won’t cover the damage caused by the water associated with these storms. To be covered for water damage, you’ll need flood insurance.
The High Cost of Flooding
It might not seem like it, but floods are the most common type of natural disaster in the United States. Approximately 90% of all natural disasters involve flooding and they happen in all 50 states, even in drier climates like Arizona, Nevada, and Texas.
Floods also happen to be among the most costly types of disasters as well. All it takes is two inches of water in a home to produce as much as $21,000 in damage. In fact, according to the Federal Emergency Management Agency (FEMA), which operates the federally subsidized National Flood Insurance Program (NFIP), from 2003 to 2012, nearly $4 billion per year was paid for flood insurance claims. And, between 2008 and 2012, the average claim filed with the NFIP was $42,000.
Homes that reside in high risk flood zones have a 26% likelihood of being hit by a flood at least once over the course of a 30-year mortgage. With floods happening all over the country on a daily basis, it makes sense to protect your largest investment with a simple, affordable policy.
How Much is Flood Insurance?
Flood insurance prices are not set according to the policy’s provider. Instead, they are regulated and set by the NFIP. The NFIP takes several factors into consideration when pricing a policy, including the home’s location, type of structure, and whether or not the property has a basement.
One of the things that make homeowners hesitant about flood insurance is that policy prices are rising. The reason is because the extensive damage caused by Hurricane Katrina and Superstorm Sandy required the NFIB to borrow more than $24 billion from the government to pay claims. In 2014, Congress ruled that flood insurance premiums need to be raised gradually, thus allowing new homeowners and those looking to refinance their homes eligible for subsidized rates.
Need a Custom Home Builder in Georgia? Call Trinity Custom Homes
If your property is located in a high-risk flood zone, you’re going to need flood insurance. But, you’re also going to want to go with a custom home builder in Georgia with a reputation for building high quality, durable homes that can withstand Mother Nature’s fury. At Trinity Custom Homes, we can’t control the weather, but we can build you a solid, eco-friendly home that’s built to last. Call us today at 888-818-0278 to get started.