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Old 06-01-2008, 09:20 PM   #21
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Bestwifeever-Are you saying your lender is forcing you to flood insure for a value greater than the reconstruction cost of your dwelling?
The lender wants the max based on the amount of the mortgage, both dwelling and land. Can't get out of it.

At this point I just consider we've paid for a trailer in NO and are now helping subsidize the insurance for others....
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Old 06-01-2008, 09:48 PM   #22
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Lenders used to make folks insure for at least the value of the loan but I believe that was declared illegal several years ago. I'll make the policy limit equal the loan amount for closing as it makes closing go smoother but right afterwards I adjust the policy limit to cover replacement value. At times the adjusted policy limits have been less than the loan and at times the adjusted loan limits have been greater than the loan.

The loan amount is irrelevant to having your home properly insured. My previous home in FL had a $198,000 loan and a dwelling replacement value of $230,000. I would have been under-insured if I had used the loan value to set my policy limits and hadn't had USAA perform an analysis of what proper coverage should be.

It may be illegal for the lender to require flood insurance at the max if that exceeds the dwelling replacement value. Are your homeowner's limits matched to your dwelling replacement cost or your loan value?
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Old 06-02-2008, 12:07 AM   #23
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After Allison came through and flooded Houston one of it's worst floods... they did a map on where it floods and where it does not... more recent than the FEMA maps...

I am not in the .2% floodplain... so to me it IS a waste to insure on something that has that small of a chance to happen... is that chance zero.. not at all... there is a chance that a huge meteor will hit the gulf and create a 100 foot wave and completely cover the whole area.... I don't think I will insure for that either...

For some reason, people think Houston is flat... well, it is kinda... but there are enough areas that are 'high' that they do not flood... never have in the records that have been kept... and our drainage is quite good... the system is designed to handle 2 inch an hour rain (at least in most places).... and the streets are designed to flood first.. and that is a LOT of water... USUALLY where it floods is along the path were water flows.. and can get backed up when there is a lot...

As for NO... well, if I were below sea level, I think I would have flood insurance no matter where I was located.... heck you were under water if there were not dikes and pumps.... that is just a flood waiting to happen...

And there are some major rivers here in Texas where you know there is a flood plain that people want to live on... and they continue to get flooded all the time... but it was clearly known...


I just looked at the maps... and pulled up my zip.... here it is... you can easily see where it floods....



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Old 06-02-2008, 12:08 AM   #24
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Bestwifeever - Here is language regarding what Fannie Mae requires for homeowners insurance. I'm assuming the same logic applies to flood insurance. Seems like most mortgages would be covered by these requirements but maybe yours isn't. It might be worth pushing the issue with your lender since you seem to be paying for additional coverage you could never collect on.

Industry Alert Homeowners Insurance Policy Limits

Fannie Mae Requirements


The Department received written confirmation that Fannie Mae does not require the homeowner's insurance policy amount to be equal to the loan amount. Fannie Mae's guidelines for determining the amount of hazard insurance coverage are set forth in the Fannie Mae Selling and Servicing Guides. For any first lien mortgage (excluding a reverse mortgage), required coverage should be equal to the lesser of:
  1. 100% of the insurable value of the improvements, as established by the property insurer; or
  2. the unpaid principal balance of the mortgage, as long as it equals the minimum amount (80% of the insurable value of the improvements) required to compensate for damage or loss on a replacement costs basis. If it does not, then the coverage that does provide the minimum required amount must be obtained.
Therefore, according to Fannie Mae, to determine the required amount of hazard insurance coverage for a loan delivered to Fannie Mae, Fannie Mae approved lenders are required to "compare the insurable value of the improvements, as established by the property insurer, to the unpaid principal balance of the loan. If the insurable value of the improvements is less than the unpaid principal balance, the insurable value will be the amount of the coverage required. If the unpaid principal balance of the mortgage is less than the insurable value of the improvements, the lender is required to calculate 80% of the insurable value of the improvements and compare the result to the unpaid principal balance. If the result of this calculation is equal to or less than the unpaid principal balance, then the unpaid principal balance will be the amount of the coverage required. If the result of this calculation is greater than the unpaid principal balance, the calculated figure will be the amount of coverage required."
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Old 06-02-2008, 08:07 AM   #25
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I'm listening to Want2retire. I figure an Oceanographer probably has a better clue about flooding than I ever will.
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Old 06-02-2008, 08:52 AM   #26
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Bestwifeever - Here is language regarding what Fannie Mae requires for homeowners insurance. I'm assuming the same logic applies to flood insurance. Seems like most mortgages would be covered by these requirements but maybe yours isn't. It might be worth pushing the issue with your lender since you seem to be paying for additional coverage you could never collect on.

Industry Alert Homeowners Insurance Policy Limits

Fannie Mae Requirements



The Department received written confirmation that Fannie Mae does not require the homeowner's insurance policy amount to be equal to the loan amount. Fannie Mae's guidelines for determining the amount of hazard insurance coverage are set forth in the Fannie Mae Selling and Servicing Guides. For any first lien mortgage (excluding a reverse mortgage), required coverage should be equal to the lesser of:
  1. 100% of the insurable value of the improvements, as established by the property insurer; or
  2. the unpaid principal balance of the mortgage, as long as it equals the minimum amount (80% of the insurable value of the improvements) required to compensate for damage or loss on a replacement costs basis. If it does not, then the coverage that does provide the minimum required amount must be obtained.
Therefore, according to Fannie Mae, to determine the required amount of hazard insurance coverage for a loan delivered to Fannie Mae, Fannie Mae approved lenders are required to "compare the insurable value of the improvements, as established by the property insurer, to the unpaid principal balance of the loan. If the insurable value of the improvements is less than the unpaid principal balance, the insurable value will be the amount of the coverage required. If the unpaid principal balance of the mortgage is less than the insurable value of the improvements, the lender is required to calculate 80% of the insurable value of the improvements and compare the result to the unpaid principal balance. If the result of this calculation is equal to or less than the unpaid principal balance, then the unpaid principal balance will be the amount of the coverage required. If the result of this calculation is greater than the unpaid principal balance, the calculated figure will be the amount of coverage required."
Thanks, Buckeye--I'll try again with the lender. The above makes sense to me. Our homeowners insurance is based on dwelling re-building value plus contents plus liability, so the coverage exceeds the loan amount.

We've talked to people (agents, bankers, engineers) over the years, who basically all said the government is not interesting in reducing the pool of insured properties . Like I said, it's just irksome to have been put into a flood plain after the house had been standing here for 100 plus years and water is nowhere around--we have pretty much moved on because it is what it is and I feel for those who are threatened by floods. I only posted here to show that flood insurance isn't always cheap.
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Old 06-02-2008, 09:04 AM   #27
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Another thing-you don't have to be in a flood plane to have a lot of damage from flooding. In most places, severe flooding will overwhelm the sewer system. This can easily cause sewer backups in homes which were not directly flooded. The National Flood Insurance program covers damage from sewer backups if it is caused by general flooding.

Raw sewage flooding the basement: Not a good thing. It's probably not wise to base your decision strictly on the flood plain maps.

What the NFIP covers:
1. Contact with flood water.
2. Sewer back-up, seepage, or hydrostatic pressure, when these conditions are caused by surface flooding which at the same time damaged the property.
3. Land subsidence, sewer backup, or seepage of water provided that:
A. There is a general and temporary condition of flooding in the area (immediate vicinity).
B. The flooding is the proximate cause of the land subsidence, sewer backup, or seepage of water.
C. The land subsidence, sewer backup, or seepage of water damage occurs no later than 72 hours after the flood has receded.
D. The insured building must be insured, at the time of loss, for at least 80 percent of its replacement cost or the maximum amount of insurance available under the program.
4. Freezing of flood waters which directly damages the insured property.
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Old 06-02-2008, 02:09 PM   #28
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My family lived on a barrier island and didn't have flood insurance when Hugo hit Charleston in 1989, like most folks. The wind policies paid most of the claims related to the storm, IIRC. Very different back then, before the wave of Florida storms hit in the 1990s.

Nowadays, all the barrier islands require it for your mortgage and we carried it when DH and I owned a house at the beach (and had a mortgage). It was quite expensive, plus we had to have Wind and Hail as well. These two policies create a quite a fun conflict when there is storm damage, due to the inherent problem of identifying "flood water" versus "wind-driven water".

We now live in the "X" zone (X zone: property is not in the special flood hazard area. There are no required elevations for properties in this flood zone. Flood insurance is recommended but not required for properties within this flood zone.)

We do not carry flood insurance. We live on a tidal creek and have deep water very close by. Our house is elevated 15 feet off the ground, and if we enclose and furnish underneath the house, we will probably not add flood coverage. We also don't have earthquake insurance!
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Old 06-02-2008, 02:17 PM   #29
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The moral of this tale: For the $250 it cost me for the 20+ years I lived there, we never had a flood....until 2001, when my house flooded, lost a new Camaro and part of my house.
Allison?
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Old 06-03-2008, 10:07 AM   #30
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i'm 3 miles from the beach in ft. hurricanedale. about 5 blocks away on either side of me are two forks of a very controlled river (gates, seawalls, etc). the crown of the road in front of the house sits at 6.66 elevation and the house is about 3 feet above that. flood insurance is $390, up from $350 last year.
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Old 06-03-2008, 10:52 AM   #31
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Lazy - 9.6' elevation in Florida.....do you get nosebleeds?
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Old 06-03-2008, 11:16 AM   #32
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ya, dial 911 if i have to work on the roof.

i joke with friends who live too far west (you know, like more than 5 miles west of the beach) that i don't go out there much because i get nosebleeds if i drive off the coast.

having lived in south florida for more than 30 years you should only see mountains though my eyes on the rare chance i have to enjoy them.
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Old 06-15-2008, 10:12 AM   #33
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They are now talking water in the 500-year flood plain in Iowa.
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Old 06-16-2008, 04:55 PM   #34
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I don't understand flood insurance mine is 2400 for 225k in coverage. I am very near the atlantic ocean. Took it out when I did a home equity line of credit. Actually they made me take it out and I just kept it.
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Old 06-16-2008, 05:08 PM   #35
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I have never had flood insurance and we are now on our 9th home and never had a flood or any kind of sewer backup. Of course never bought a home in the 100 flood plain either. BTW what is the Cash deductible on these policies? I often heard it was a bit high; like the first $25K, or more, comes out of your pocket. Also don't most developments being built now have anti-back flow valves installed into the sewer lines to prevent backups? I know my last three homes and the current one does.
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Old 06-16-2008, 06:04 PM   #36
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Our homeowners policy covers sewer backup--yours might too.

Our flood insurance (required by lender) covers only water that enters our home through points of entry above ground. Our flood insurance has a $5,000 deductible. the highest offered. If I could get $25,000 deductible I would.
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Old 06-16-2008, 08:40 PM   #37
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I pay $40 per year on my Homeowner's policy for the sewer backup coverage. I have a $2000 deductible on my Homeowner's policy but I don't know what my deductible is on my flood insurance. Guess I should check.
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