Episode 156: The Trap of Military Insurance Companies and Flood Insurance

There are certain insurance companies out there that offer certain benefits to military members. In order to get access to these companies you either had to have served in the military, be a child of a member, or have a parent who is member. It's important to know that the military states these companies are not endorsed or affiliated with them.

It's great that companies like this can offer great benefits to those who have served our country.

The things these companies offer like many companies is flood insurance through the National Flood Insurance Program. Even though these policies are available to any body since this is a government program, these companies only allow their members to get coverage through them.

So in this episode of the podcast we discuss three areas of concern when it comes to doing this.

1. Policy transfers
2. Grandfathered policies
3. Newly mapped flood policies

Policy Transfers

Let's look at policy transfers or policy assumptions first. These are policies that are transferred from one buyer to the next. If you have watched our videos, read our blogs, or even listened to our podcast then you know that these can be very beneficial for a few reasons.

1. They can lock in current rate which may no longer be available
2. New policyholder may not owe a payment until renewal

The problem with military insurance companies is they only allow those who qualify for membership to take advantage of this on their policies. As you can imagine if you are selling your home this could create a major problem. The new buyer maybe required to take out a new policy with the National Flood Insurance Program if they do not qualify.

This could be the difference between a $500 policy and a $2500 policy.

So what can you do?

Well if you are even thinking about selling your home then you want to make sure to rollover your policy to another write your own carrier before your next renewal.

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Once this policy has been rolled over to another carrier it will allow for a smooth process on doing any policy transfers.

So what about grandfather policies?

Grandfathered Flood Insurance Policies

These have a similar process to policy transfers. However you are not assigning the policy to a new buyer. You are simply rolling it over to a new carrier so if you decide to do a policy transfer one day the option is available.

The last area of concern that we want to discuss are newly mapped policies.

New Mapped Flood Insurance Policies

Remember this is generally when your property has been moved from a non mandatory flood zone to mandatory flood zone. You are basically given preferred rates the first year and then steady increases each year after that until the premium matches the risk. In 2020 many of these properties are looking at up to 25% rate increases.

So how do newly mapped policies impact you if you have it with a military insurance company?

Well initially there may not be much impact until you try to assign this policy to someone else. This is when most people hit the brick wall and many real estate transactions fall apart.

It's also important to understand that at this point in 2020 these military insurance companies do not offer a private flood insurance option. This means if you have your policy through them you could be limiting your coverages and missing out on savings of up to 50%.

Maybe you have more questions about having your flood insurance through a military insurance company or if its the best fit for you? Make sure to visit our website or check out our daily flood education videos on our YouTube channel.