Do I need flood insurance?
If your home is located in a Special Flood Hazard Area, you are required by law to maintain flood insurance coverage equal to whichever is greater: your remaining loan balance, or 80% of the replacement value of your property improvements (but not to exceed the full replacement value of the improvements).
Don’t let the fact that you don’t own beach-front property lull you into a sense of false security. The fact is that beach-front structures only account for 3% of all flood losses. Homeowners who live in high hazard flood areas should seriously contemplate purchasing flood insurance…especially when you consider that they have a 26% chance of having a flood loss over the course of a 30 year mortgage! Often, flood insurance is required as a condition of granting a mortgage if your lender determines that your home is in a high hazard flood area. Even if you live in a low hazard flood area your property may still be at risk. Each year, about 25% of all flood claims paid are for property located outside high-risk areas. The good news is that there is a Preferred Risk program that offers substantial premium discounts for homes located in low hazard areas. If you think your home is at risk, you might want to consider contacting your local agent or Travelers representative.
You may need flood insurance if you are located in a flood-prone area. Nine out of every ten disasters in California involves flooding. In the life of a 30-year mortgage, a home located in a special flood hazard area has a 1% chance of being destroyed by fire, but a 26% chance of being destroyed by a flood. That is, such a home is 26 times as likely to be destroyed by flooding than by fire. In 1979, Santa Barbara County became a participating community in the National Flood Insurance Program (NFIP) and federal flood insurance became available to residents of the county. Without federal flood insurance, recovery from flood damage to your home is usually unavailable due to the increased risk to private insurance companies. As a condition of NFIP, the Santa Barbara County Flood Control and Water Conservation District adopted Floodplain Management Ordinances that meet, and in some instances exceed, the Federal requirements for development in flood-prone areas. Federal law requires lending
If your property is officially designated as being in a special flood hazard area, you must obtain this coverage. Even if your home is not in a special flood hazard area, you may wish to consider flood insurance. It is important to note that flood insurance is not included in a standard homeowners’ policy.
Flood insurance is required for properties located in federally designated flood areas as determined by FEMA (Federal Emergency Management Administration). When you apply for a Mortgage or Home Equity Loan with PFFCU, a flood determination certificate is purchased to determine if you are in a flood plain. It is important to note that normal homeowners insurance does not cover flood losses.
