Below is a Dialogue I had with a client about flood insurance it seems that there is a common belief that our properties will never flood so we don’t need flood insurance. I hear this day in and day out. And I hope to educate.

— Flood Nerd—–


Doug
I am so excited I like getting clients on this option when they fit.  We are pre-approved for the premier option
COVERAGE OF $250,000 building with $5,000 Deductible  (no personal property coverage) Premium $861.45
COVERAGE OF $250,000 building with $5,000 Deductible  ($50,000 personal property coverage) Premium $998.47
I really appreciate the opportunity to help you find coverage Thank you!!
Let me know if we are good to go and I will pull the application.
Looking forward to talking to you.
 ~At your Service Your flood nerd. Regards Robert – 1-866-990-7482

— Doug in GA—–

HI Robert. Thank you for your quote. Does this policy meet the underwriting requirements for FEMA required insurance for mortgaged properties? That is, my lender should accept this policy? Correct? 
Thanks, Doug

— Flood Nerd—–

It is attached is a document that will show your lender all the makers they need to have to comply with the Federal law.
This policy is 100% accepted by all lender. Underwritten by Lloyds of London the strongest financial institution in the world.
Great question let me know if you have any others.
AT your service kind regards Robert

(Link to private flood compliance)

— Doug in GA—–

Hi Robert, Thanks for the quick response. You must not be a “bot” 😄 Followup question.
Observation — I think the likelihood this property will flood during my ownership period is remote. Therefore, I want to self-insure the greatest amount of risk as possible. 
Question — what is the amount and cost of the minimum coverage that still meets FEMA’s requirement for mortgage lenders? 
Comment — Personally, if no lender was involved I would 100% self-insure for flooding and carry no insurance.
Thanks, Doug

— Flood Nerd—–


Hi Doug,
No Bot here, however, I could likely benefit from being able to do repetitive functions the same way every time. 🤓

You are not unusual (unfortunately), when it comes to flood insurance, most people believe that they will never have a flood loss and opt out of carrying flood insurance if they can, or will drop it as soon as they get a LOMA or pay off their loan. 

I am guessing this is because most are “forced” to purchase flood insurance if they live in a High-risk flood zone (SFHA) and the lender forces homeowners to buy flood insurance because they have a loan. And on the government flood program since they have had a monopoly for over 50-years premiums have gotten out of control!!
The thing I find most interesting is that we as a society accept buying hazard insurance (homeowners) when the chance of us having a fire/robbery/or getting sued is extremely low chance yet we accept that we have to pay for it. Average homeowners claim is $7,368.
Flooding is the #1 natural disaster we in the USA faces. 
EVERY property is in a flood zone and Every property has a 28% of flooding any given year.  
We just don’t know what mother nature is going to do. 
FEMA says the average claim that they have paid out over their 50-year monopoly is $40,000+
You are looking at a home in Georga who is ranked number 12 in flood claims $20.5 Billion claims made 118,004 home damaged. 
Are you willing to risk it and possibly add this home to the loss list yet do it without flood insurance?
Maybe you are the small percentage of finally independent individuals and can afford a $40,000 exposed to risk, however, most that have money protect it and insurance is the way they do so. I can guarantee that most that have means have it because they don’t leave anything exposed to their wealth. 
Insurance is something you wish and hope to never use. Life insurance we don’t get to use but our survivors are taken care of. The peace that brings is priceless. Real estate and most peoples home are their main asset and smart individuals that have and want financial freedom cover their risk. 
To insure or not is a very personal decision thanks for engaging with me to chat about your risk, now you have more information and when you decide you want to not worry about the chance of flood when that hurricane is 15 days out give me a call. 
Doug, Great questions let me know if you have more 
AT your service kind regards Robert Your flood nerd

— Doug in GA—–

Hi Robert
Good information. But you didn’t answer the question I posed. That is, what is the minimum amount of insurance and premium in order to be in compliance with FEMA loan underwriting requirements. For example, could I insure a $250K value home for only $50K worth of insurance, self-insure 80% of any possible loss and still comply with FEMA underwriting standards? 

— Flood Nerd—–

Oh, forgive me I missed the question when I climbed on my soapbox

Your lender will require coverage to the max of the loan you have with them. $250,000 is the Max that the lender is legally required to cover. So if your loan is more than $250,000 then you will have to cover the building at that max.

I can write a policy for as low as $50,000 but I have seen (depending on where I put the policy) there is no difference in premium if you cover at $70,000 so. If I can get you the same $20,000 more I for the same price that is a no-brainer.

The form you filled out said you needed coverage (likely because your lender is requiring) at $250,000 is that what you want the quote at?
I am a bit confused as to what you are asking. I have not heard of any lender accepting self-insured for flood insurance. If you find one I would be really interested in this learning. The Federal Government has a law that requires “Government BACKED loans” to purchase flood insurance if the property is in a high-risk flood zone. Some private flood companies don’t require flood insurance (usually these are business type deals) and if you are working with a lender you will have to work with them to figure out if they are going to allow self-inured for flood insurance. I don’t know the answer to that as I am not a lender but a flood insurance expert.

The government has “forced lenders” that are getting their backing to require flood insurance so the lender is who will be able to tell you if the idea of you self insuring is within their guidelines and legal requirement. I have run across very few lenders that are not risk adverse and I would think that a self insured situation when they are required to mandate it by law is something they will not entertain. 

I want to help you even if it is free advice you are trying to get from me but I don’t know if I can answer your exact question since I am not a lender.

You are welcome to call me and discuss further if you desire.