You can't turn on the radio or tv without hearing an insurance ad these days. Normally its price driven on a certain product.

So what about these companies that offering every insurance product they can. They think they are helping their clients by offering these products but could they actually be hurting their clients?

In the last 7 days we have dealt with two heart breaking situations that could have been avoided.

They both had to do with FHA loan home buyers. The first situation was a potential home buyer in the McDonough Georgia area. This customer had gotten her flood insurance taken care of with a private flood insurance company. However according to the individual the insurance company never asked what kind of loan the customer was doing?

You might ask how does this impact flood insurance in areas like McDonough Georgia?

Well FHA currently does not accept private flood insurance on their loans. Now we have seen some exceptions but for the most part this is correct.

So for this customer private flood insurance was not an option but she was not even aware of it. So this customer had to walk away from the home she was buying and was out lots of money for something she really had no control over.

Now let's look at situation number 2.

A property owner was relocating from New Jersey to the Georgia coast. He was familiar with the flood insurance restrictions on FHA loans. He got a quote from one of the larger auto and home insurance companies. He verified everything was good over the course of three weeks. They said yes everything was great.

However they went to complete the policy and was told that flood insurance was not available on this property.

You may say I thought the National Flood Insurance Program offered flood coverage on every building. This is not exactly true there are some situations they do not offer coverage.

  1. Buildings over water in certain situations
  2. Properties that do not participate in the National Flood Insurance Program
  3. Properties in CBRA zones in certain situations

In this particular situation this property did not qualify for the National Flood Insurance Program because of the year built. This property was in the Coastal Barrier Resources Act area which restricts development after 1982.

 

Now most flood systems should alert an agent about this when quoting but insurance companies should also do a CBRA zone verification on coastal properties. Unfortunately in this situation neither one of these were done. As a result this property owner was out thousands of dollars from a relocation, inspection fees, and other costs associated with this property.

Now both of these situations could have been avoided had the insurance companies had the right flood underwriting process.

Even though someone says they have a department that specializes in flood insurance it doesn't mean they are asking the right flood questions.

So whether its your commercial flood insurance or the coverage on your boat its important to find an expert in this area. This is why at the Flood Insurance Guru all we do is flood insurance, flood education, and flood consulting.

By the way I once bought a home in a high risk area and it was a nightmare. So I know how these buyers feel when this happens.

So if you have questions on how to avoid these things from happening to you then make sure to visit our website.

You can also checkout our daily flood education videos on our YouTube channel or even check out our podcast.

Remember we have an educational background in flood mitigation. This means we can help you understand your flood risks, flood insurance, and mitigating your property long term.

 

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Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

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