Chris Greene

Chris Greene


Free Flood Insurance for FHA Loans

In this podcast we discuss free flood insurance for FHA Loans. Does it really exist? What is a policy transfer or assumption? What are the benefits?


Free Flood Insurance for FHA Loans

Free flood insurance for FHA loans, does it exist? Yes it does exist in a certain form. Let's talk a little bit about how flood insurance works with the National Flood Insurance Program also known as the NFIP. NFIP requires flood insurance to be paid in full up front. So where does the free part come into play? Well let's say a property owner is selling their home since they have already paid the year in full the new home owner would not have to pay for the flood insurance until renewal. This condition exists if a policy transfer is done

What is a Policy Transfer?

A policy transfer or policy assumption is when a NFIP flood policy is transferred from one property owner to another one. NFIP requires a sheet of paper to be signed when this process is completed. This process keeps the policy going until it lapses for non payment or is cancelled.

What are the Benefits of a Policy Transfer?

There are three benefits to doing a policy transfer

  1.      No payment up front
  2.      Continuous coverage credit
  3.      Policy grandfathering

As mentioned earlier flood insurance is required to be paid up front so when a policy is transferred the new buyer does not have to pay for the flood insurance until renewal.

Continuous coverage is a big deal for NFIP policies because it shows them that coverage has been steady on a property which puts it into different rating categories in their system. Things that would cause this to go away would be a lapse in coverage for non payment or if a policy in cancelled.

Policy grandfathering is something NFIP is slowly doing away with but is still available. Let's say this flood policy was taken out many years ago when a property was in a low risk flood zone but now its in a high flood zone. The rating would reflect the zone the policy was originally written in. This could be the difference between $500 in flood premiums and $2000 in flood premiums.


These are three benefits to doing a policy transfer. If you have further questions about how to do a policy transfer make sure to visit our website Flood Insurance Guru. You can also visit our YouTube channel or Facebook page The Flood Insurance Guru where we do daily flood education videos.


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