Many standard homeowner’s insurance policies don’t cover flooding. However, if your mortgage is federally backed—such as an FHA mortgage or VA-guaranteed loan—you must purchase flood insurance if your home is located in a flood-prone area.
Even secondary market mortgages, including those by Freddie Mac and Fannie Mae, require separate flood insurance for homes in flood zones.
If you’re uncertain whether your new Georgia custom-built home requires flood insurance, this guide offers valuable insights.
Do I Really Need Flood Insurance if My Home Isn’t in a Flood Zone?
If your new home isn’t in a flood zone, a mortgage won’t force you to carry flood insurance. Yet, don’t dismiss coverage. While certain areas face higher flood risks, floods can strike anywhere, leading to extensive damage.
Surprisingly, many homeowners realize too late that their homeowner’s insurance covers hurricane, tornado, and storm damage—but not the associated water damage. To protect against water-related damage, flood insurance is necessary.
The High Cost of Flooding
Though not obvious, floods rank as the most common U.S. natural disaster, occurring in all 50 states—even drier regions like Arizona, Nevada, and Texas. Moreover, floods are among the costliest disasters. Just two inches of water can inflict up to $21,000 in damage.
According to the Federal Emergency Management Agency (FEMA), responsible for the National Flood Insurance Program (NFIP), floods accounted for nearly $4 billion annually in insurance claims from 2003 to 2012. The average NFIP claim between 2008 and 2012 reached $42,000.
Homes in high-risk flood zones have a 26% chance of facing a flood over a 30-year mortgage. With floods occurring nationwide daily, safeguarding your substantial investment with a budget-friendly policy is prudent.
How Much Does Flood Insurance Cost?
Flood insurance rates are established by the NFIP, not the policy provider. The NFIP considers various factors, such as the home’s location, structure type, and basement presence, in pricing policies.
Concerns arise as flood insurance costs rise. This trend follows Hurricane Katrina and Superstorm Sandy, which necessitated the NFIB to borrow over $24 billion to cover claims. In response, Congress ruled in 2014 for gradual flood insurance premium increases. This strategy helps new homeowners and those refinancing access subsidized rates.
To ensure your home remains protected, explore suitable flood insurance options.
For more information, contact Trinity Custom Homes GA at 888-818-0278. We’re committed to helping you make informed decisions for your new home.