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Q: Doesn't my homeowner’s insurance policy cover flooding?

No. Flood damage is not typically covered by a homeowner’s insurance policy.



Q: Why does my mortgage lender require me to buy flood insurance?

Under federal law, the purchase of flood insurance is mandatory for all federal or federally related financial assistance for the acquisition and/or construction of buildings in high-risk flood areas (Special Flood Hazard Areas or SFHAs).


The amount of flood insurance coverage required by the Flood Disaster Protection Act of 1973, as amended by the National Flood Insurance Reform Act of 1994, is the lesser of the following:

  • The maximum amount of Flood coverage available for the particular property type,
  • The outstanding principal balance of the loan, or the insurable value of the structure.

If the property is not in a high-risk area, but instead in a moderate-to-low risk area, federal law does not require flood insurance; however, a lender can still require it. In fact, nearly 1 in 4 NFIP flood claims occur in these moderate- to low-risk areas! Note that if during the life of the loan the maps are revised and the property is now in the high-risk area, your lender will notify you that you must purchase flood insurance.


Q: What is the difference between actual cash value insurance and replacement cost insurance?

A:  Actual cash value insurance reimburses you for the value of lost, damaged or stolen goods after depreciation is taken into consideration. Replacement cost insurance reimburses you the amount it would take to replace, rebuild or repair damages with materials of similar kind and quality, without deducting for depreciation.

Q: When should I file a claim and who do I call if I need to file a claim?

A:  If you’re not sure whether or not you should file a claim, it is best to consult your advisor first.  If it's clear you do need to file a claim, you will want to do it through your specific insurance carrier.  If you are one of our valued customers, you will be provided with specific instructions on how to do this during our onboarding process.