Unexpected Risks of Flood Insurance: What Homebuyers Need to Know

• When Insurance Falls Short: A recent story from a coastal community in Florida highlights a troubling situation: a homeowner invested in flood insurance through the National Flood Insurance Program (NFIP) but had their claim denied due to a “prior loss.” The previous homeowner made the claim but didn’t use the insurance money to fix all the damage. This means previous flood damage went unaddressed by the previous owner, leaving the current owner financially responsible for repairs. So you’ve paid your premiums with no idea this would happen!
• Protecting Yourself from Previous Claims: Many buyers don’t realize that past claims on a property can impact future claims, especially if prior damages weren’t fully repaired. Here are steps you can take to protect yourself:
  • Read your Property Disclosure from the Seller: If this form is not accurate you may have a case against the Seller.
  • Request a Full Property History: Ask for documentation on previous insurance claims and repair work.
  • Conduct Thorough Inspections: Hire professionals to verify the condition of flood-prone areas.
  • Look Beyond the Surface: Check appliances, wiring, and structures that could be impacted by prior flooding.
• Policy Limitations to Watch For: The NFIP covers millions of homes, but the program’s policies may deny claims if prior claims remain unresolved. It’s essential to understand the fine print in your policy and any requirements for disclosing or addressing prior damage.
• Advocating for Reform: With over 23,000 NFIP communities, there’s growing concern about the need for reforms that protect new homeowners from past issues. The NFIP and local governments can take steps to ensure transparency for buyers.

Flood insurance is a valuable tool, but it’s essential to be aware of potential pitfalls. By doing due diligence, you can better protect yourself from unexpected financial burdens. Call Mee at 561-817-0033 so I can make sure these type of issues are addressed before you buy.