Flood Insurance – Don’t get caught without a paddle!

I’m supposed to be a big real estate expert and a mortgage aficionado. So I am very embarrassed to tell you that I did not due my due diligence when I bought my home and I got stuck with flood insurance. Here’s my story. We fell in love with this house. It is on the lake. It is what I would call “high-low bank” meaning that the elevation from the house to the highest point of the water is about 5 feet. Moses Lake has 2 water exit points so there is no single point of failure. The water is managed to never go above a certain height. Flood zone was not even on my radar.

My mortgage application was plugging along and then BOOM - I got a call from the lender that I needed to get a flood insurance policy. Yikes! These are really expensive. Well, we had no intention of not buying the house just because it was in a flood plain (or so the government said) so we bought an insurance policy and closed on the house.

Here’s what I learned.

1. Even if you don’t think you’re in a flood zone, ask. Start by asking your agent.

2. If you find out you are in a flood zone, shop around for insurance. You don’t have to purchase coverage from FEMA. FEMA coverage is generally far more expensive than a private insurer. For me private insurance was about half the cost. There is no requirement for you to get your coverage from FEMA.

3. If you think you are not in a flood zone, you can fight it. But you won’t have time to fight it before your loan closes. Fighting it is expensive. For me it cost the same amount as my 2nd year flood insurance premium but it was worth it. Start by asking your neighbors if they are also in a flood plain. That can give you some ideas on how to proceed. If you decide you need to move forward with a dispute, you will need to hire a surveyor who can perform elevation surveys. They will do the survey and complete the paperwork to send to FEMA.

Knowledge is power. And it sucks to get thrown a monkey wrench like this right before closing (not to mention coming up with the extra money). It is best to do as much due diligence on the property yourself before you even make an offer.