Homeowners in flood areasOn December 17th, 2011, Congress approved reauthorization for the National Flood Insurance Program (NFIP) through May 31st, 2012. This means that flood insurance is available to homeowners (and people buying properties) living in a designated flood plain.
Although the re-authorization is just a short extension of time for the NFIP, the National Association of Realtors (NAR) is working on getting legislation passed to reauthorize the NFIP for five years. More continuity in the availability of flood insurance to homeowners and home buyers would provide an added element of stability to real estate markets throughout the country.
Flood insurance is required by most lenders to qualify for a mortgage to buy a property in a designated flood plain. Most homeowners’ insurance policies will not typically cover any building or personal property damage caused by flooding. Therefore, a separate policy is required for homeowners to be indemnified from flood risk.
If you have questions about whether a property is located in an area that requires flood insurance, you can check with your insurance agent or local county and municipal officials. Additionally, there are companies that provide official flood zone determinations (e.g., TransAmerica) and this information is often requested by a real estate buyer’s attorney. Keep in mind that flood zones are updated periodically, which means that a property today may not be considered in a flood zone, but it might be considered in a flood zone later.
For more information about the NFIP, see their website, www.floodsmart.gov. If you would like more information about how living in a flood plain or purchasing a home in a flood plain affects the value of the property, contact Leaf, Realtors, to discuss this at 908-975-9756 or kelly@leafrealtors.com.