Buying a home means you will need to think about insuring the property. However, in many cases, the choice to forego coverage is often not optional. You'll generally face a requirement to get homeowners insurance and other coverage. At times, depending on where you live, you might also face a requirement to get flood insurance. Why is this the case?
To many lenders, flood insurance is one of the most-critical types of coverage that certain property owners can carry. In these cases, policies will protect not only the resident, but also the lender itself.
Property Insurance Requirements
When you buy a home, you will probably finance it with a mortgage or other loan. That means paying it back to the lender over a period of years. For the duration of that time (sometimes decades), the lender has a financial interest in your home. So, if something happens to the property, they stand to lose money just as much as you do.
Lenders will likely institute a requirement for you to carry home insurance. They do so because if something like a fire or tornado damages your home, you will need to repair it.
However, you will still have to keep up the mortgage. An appropriate homeowners policy can help you do so without compromising your financial duty to the lender.
However, one incident that home coverage usually will not cover is flooding from weather. Your policy might cover damage from burst pipes or utility failures. Still, river swells and flash flood damage will have no coverage on a standard home policy.
Floods can occur anywhere at any time, and homeowners often find these policies very beneficial. So can lenders, and they might require buyers to get this coverage.
Flood Coverage Requirements
Most flood insurance policies come backed by the federal National Flood Insurance Program. The NFIP has stipulations that require homeowners in certain flood-prone areas to buy this coverage.
Lenders might have to require buyers to get this coverage. If you live in an area that is a high-risk flood zone, or a Special Flood Hazard Area, you will usually have to get a policy. However, the rules vary from property to property. Some homeowners in high-risk flood zones will have no requirements. Some lenders, on the other hand, might even require coverage of properties with lower flood risks.
Worcester can receive up to four feet of rain each year. Therefore, even if you've never faced a flood before, that doesn't mean you will never do so. Talk carefully with your home insurance provider to learn more about your flood risks. Then, make an informed decision about flood coverage.
Protect your home from disaster. Call Knight-Dik Insurance Agency,Inc. at (800) 286-6353 for information on how to protect your home.
Also Read: Preparing Your Home During Evacuation Orders