Episode 3 of FAQ for Beach Home Buyers5/18/2021
This is the third article in my series of Frequently Asked Questions which I answer repeatedly for buyers I am working with who are looking to buy beach property on the Oregon Coast.
Do I need flood insurance?
If the house is in a FEMA Flood Zone and you are getting a mortgage, then you will need flood insurance. It’s important to know that flood insurance rates can be in the thousands, so make sure to find out before making irreversible decisions in negotiating to buy.
If it is in a flood zone, you will need a Flood Elevation Certificate in order to obtain insurance. Ask if the owner has a current Flood Elevation Certificate. If they do not already have the certificate, then be aware that it will cost hundreds of dollars to hire a surveyor to complete an FE so that your loan can be approved. Also, because there is a scarcity of available surveyors, it could take some time to obtain that FE certificate.
If the home you are buying is built at ground level on a concrete slab, or if it has a basement, then your flood insurance rates could go sky high. It’s important to find out as early as possible in your negotiations to avoid unpleasant surprises after it is too late for a remedy.
Important: if the house is in "Tsunami Hazard Zone" but not in a FEMA flood zone, then it is not likely your lender will require flood insurance. Some people get flood insurance anyway, just in case. I have been told by a FEMA rep that flood insurance would cover tsunami inundation.
FEMA flood insurance caps out at $250,000 so if you are buying a house that will cost $500,000 to rebuild, the FEMA insurance may not be enough. There are other privatized flood insurance options out there. Ask your insurance agent what is best.
FEMA flood insurance rates are supposed to be the same regardless of which insurance agent writes the policy, however I often hear of clients who obtained quotes from more than one agent and the quotes differed. So, it may be a good idea to ask more than one agent for a quote. It's possible this is explained as human error. Not sure. But it won't hurt to ask around.