Home buying season is in full swing in Texas. The number of homes on the market has skyrocketed as schools have gotten out, and we are receiving requests for homeowners insurance on home purchases constantly. One of the hiccups that can occur if you haven't done your research is a lender telling you that you need flood insurance on that new home you just put under contract. The cost associated with these policies when they are required by your lender can drastically change your cost of owning the home. One way that independent insurance agents can help mitigate these costs is by using the Private Flood Insurance Market. The question that we always hear is whether the private flood insurance policy is good for you. There are a five key areas that will allow you to determine that your policy is in fact adequate ans will meet the needs of your lender.
- The insurer issuing the policy must be admitted. That means that they are approved to do business in the State of Texas based on the regulation set forth by the Texas Department of Insurance. This is important because the state has the ability to create a bailout in the case of the insurance company going out of business. Admitted companies pay into a pool of money for just this sort of occurrence.
- Your policy needs a clause stipulating that the insurance company will give at least a 45 day notice of either cancellation or non-renewal. This notice will make sure that you have the ability to secure a new policy in a timely fashion if the current company decides to not offer you a policy at the time of renewal. This can be done for many reasons, but the bottom line is that written notice needs to be provided to both you and the mortgage company to make sure the transition is seamless.
- The policy needs to guarantee that the flood insurance provided is at least as broad as what you can receive as part of the NFIP (National Flood Insurance Program) policy. That means that your coverage amount, deductibles, and exclusions or conditions must meet or exceed what the government will provide. Insurance For Texans only works with companies that will provide you coverage that exceeds what you would receive from the NFIP.
- Since the policy is being required by a lender, you need a mortgagee clause gives strong interest to the lender in the same condition that an NFIP policy does today. Lenders need to be assured that they can recover the money that they lent to you. The clause on your policy that stipulates that they get their money back is the item in question here.
- Finally, you will need the ability to have at least a one year period of time to dispute and file suit if all or part of a claim is denied. The denial must be in writing and provided to you as the homeowner.
FEMA has set forth guidelines, but they have not set these in stone. As a result, your lender can accept a policy with lesser language and conditions. But the reality is that we are working for you and want to make sure that you are properly covered using policies that actually protect your home and possessions.
If you would like to discuss your needs about your home or flood insurance for it, don't hesitate to call us at 469.789.0220 or hit the button below!