In this episode of The Flood Guru Podcast we are discussing the FHA push back on private flood insurance.
So what is private flood Insurance? Well this is flood insurance that is backed by private insurance companies instead of the government. For the last 50 years the National Flood Insurance Program was really the only option for property owners. Private flood has slowly entered the market over the last 15 years. It has been available on conventional loans until July 1st 2019.
On July 1st 2019 FDIC passed a law stating private flood insurance would be available on all loan types. This has been great for property owners dealing with credit unions, VA loans, and USDA loans. However it still has not solved the private flood insurance options for FHA or Federal Housing Administration loans. FHA loans still are not accepting private flood insurance, they are suppose to be releasing an updating ruling on this issue in 2019.
So if you have an FHA loan what are your flood insurance options then? Well if the National Flood Insurance Program is not a good option for you then you may want to look at changing your loan type. When looking at the National Flood Insurance Program for your flood options you may have a couple of choices.
NFIP Flood Insurance Options
If you are purchasing the property the first thing you will want to look at is what's called a policy transfer or policy assumption. This is when a current property owner transfers their flood insurance policy to a new property owner. This is very popular in areas where flood premiums are very high like areas along major rivers like Nashville, Knoxville, Memphis, Saint Louis, and Des Moines.
The other option is to do a traditional flood policy through the National Flood Insurance Program. You can start that process by clicking this link. The downside to this option is it doesn't give the continuous coverage credit like policy transfers do and you would have to pay the full thing up front.
Can You Get Around the Flood Insurance Requirement
In many situations you can get around the requirement of purchasing flood insurance if you can prove that the flood zone is correct. This is called a letter of map amendment of flood zone change. While this can be success it usually is a low percentile. You can look at seeing if this is an option by clicking this flood zone removal link. If you win then the requirement would be removed which generally takes about 30-60 days to get approved. It is still recommended that you carry flood insurance in these areas as 26% of flooding occurs in low risk zones and this is where the cheapest flood insurance rates are available.
If you have further questions about FHA loans and flood insurance please visit our website the Flood Insurance Guru. You can also visit our YouTube channel or Facebook page The Flood Insurance Guru where we do daily flood education videos. You can also check out our weekly podcast called The Flood Guru.