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Is Flood Insurance A Requirement On Your Home?


Federal Emergency Management Agency Elevation Certificates

Federal Emergency Management Agency (FEMA) Elevation Certificates are utilized to determine if a house or some other structure is situated within a Flood Hazard Area (FHA). However, many mortgage companies designate a potentially very costly flood insurance for houses and structures that may not be located within an FHA. In these cases, a Letter of Map Amendment (LOMA) may be filed with the FEMA on a case by case basis. The LOMA is then reviewed by FEMA in order to determine the validity of the claim, and if the construction is found to be outside the FHA, a letter is drafted accordingly. Thus, you are then at liberty to send this letter to your mortgage company in order to eliminate the flood insurance. In most cases, a FEMA Certified Elevation Certificate and/or a LOMA is a pre-ordained requirement for the mortgage company to waiver the flood insurance.

The Requirement for Flood Insurance

In recent years, many homes outside of an FHA have succumbed to damage or even complete destruction due to unparalleled levels of flooding within some areas. Should the home or structure be destroyed through flooding and should the home (or structure) owner not be in the possession of flood insurance, then the mortgage company may be liable to pay for the outstanding loan with no way for recompense.

Hence the reason why now, mortgage companies often insist upon flood insurance on a home or other foundation. Conversely, being in possession of a FEMA Elevation Certificate is often the only way for a homeowner to avoid the added expense of flood insurance premiums being levied on their home.

The Cost of Flood Insurance – How to Determine Risk

Flood insurance may cost upwards of $750.00 per year and can exceed $5000.00 per year depending on the value of your property in addition to the level of flood risk. Determining the level of flood risk can only be achieved through a FEMA Elevation Certificate together with the filing of the LOMA. Almost certainly, where insurance is a requirement by the lender, the cost of the FEMA Elevation Certificate in addition to filing a LOMA is going to be much less than meeting the on-going costs of flood insurance that may in fact not be required. Should you decide to invest in insurance and pay for the FEMA Elevation Certificate and filing of the LOMA, you have an accurate risk assessment, which can of itself save hundreds of dollars every year.

Crooked house

Image by Don McCullough via Flickr
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