Do I Need Flood Insurance?

In addition to home insurance, other types of insurance may be required by mortgage companies. Depending on where your home is located, you may have to have flood insurance.

When purchasing flood insurance, it makes sense to keep an open mind, as there are a lot of considerations. The FEMA flood maps change, causing properties to move in and out of flood zones. In some cases, it may be blatantly obvious when a property is in a flood zone, and other times it is baffling how a property can be so close to the water and not be listed in a flood zone. Cape Cod is very unique, as some properties are far away from the ocean and yet are listed in a flood zone, and it might not be so obvious as to why.

How much does flood insurance cost? The expense of flood insurance will depend on many factors. On the FEMA flood map below, under “Legend”, there are different zones and categories where you can see where a specific property has been zoned.

Please keep in mind that flood insurance typically only insures a property up to $250,000. This amount is clearly not a lot of coverage when you are making a substantial investment in the purchase of a property. If you pay cash, or own the home outright with no mortgage, then having flood insurance coverage is optional. Most homeowners do not purchase flood insurance, but carry more insurance coverage on their regular homeowner’s insurance policy. If one is paying for flood insurance coverage, or carrying additional coverage on their regular policy, an extra $250,000 of coverage is very minimal additional coverage on a much higher home investment.

How do you determine what insurance will cost before purchasing a home? Your buyer’s agent can help guide you to an answer with this, but first we recommend looking on the FEMA flood map, at the button provided above, to see what category in which the property is zoned. We also suggest asking the property’s seller for an elevation certificate, as this is required in order for an insurance agent to determine the cost of flood insurance for the specific property. An additional question for the Seller and Seller’s agent is: does the current homeowner already pay for flood insurance? If so, how much? If it is a great rate, is it transferable? The homeowner’s insurance agent will be able to answer this question for you.

A home might be zoned in the highest risk category, but was elevated out of the floodplain when it was built, and therefore the cost of flood insurance will be minimal. Or it might be a costly expense, and this can range quite a bit. Your insurance agent can advise you about the best way to be fully covered, prior to making an offer, or during the due diligence period.

Besides flood insurance, it is important to look at the overall structure of the property. Does it need work? When a property is located within 100 feet of wetlands, it is important to get local Conservation approval before moving forward with improvements.

We feel it is important to look at each property, individually one at a time, and evaluate the overall situation to make the best decision when purchasing a property on Cape Cod.