My son owns a lot, is about to have a house built. He was offered (optional) flood insurance to cover the period of construction. One time premium of $300, deductible of $25,000. This sounds really bizarre. Anyone with insight/experience?
Never heard of that.
Interesting idea. Obviously the fine print would control whether this is a good idea or not. With a 25K deductible I would be more concerned about whether the house will qualify for federal flood insurance after it is built.
Is the house in a flood zone? Check with the city for that information.
If it is, flood insurance may be required for a mortgage. If not, turn it down.
That deductible is outrageous. The most I’ve seen is $5,000.
I worked in real estate for 26 years.
It’s hard to get insurance on a house that’s under construction, period. I’d personally skip this, and just assume the risk. Is he building in a flood zone?
Our normal homeowner’s insurance has a $10K deductible. The only thing we’d ever use it for a total loss, and it keeps our premiums reasonable.
I work in real estate but I’m not super familiar with construction. What happens if something happens during construction, like the house burns down? Is it covered by the construction companies insurance, or are you just screwed?
Who provides coverage should be spelled out in any contract. Most general contractors have general liability coverage, and can get riders for things like earth movement and flood.
I’m not sure. We’ve only built our own houses, and basically, if it burns down, we’re screwed. Maybe large construction companies are able to get insurance for under-construction properties, but we’ve never been able to.
Doesn’t FEMA make the flood maps that insurance follows? Been through this, and the maps change over time.
Flood insurance is by the government. Your regular insurance agent may facilitate the policy, but if it’s flood, it is underwritten by Uncle Sam. And flood insurance is ONLY for flood. Meaning, if the house burns down, flood insurance doesn’t do squat.
If somebody is talking flood insurance, you better research flood plain maps! Some mortgage companies will not do business with you if your property is located in a flood plain.
Just look at the massive floods that have occurred recently in the US! Houses which have never, ever been threatened by flooding are under water this year! And guess what? Regular homeowner insurance will not cover ANYTHING those folks have suffered.
Before the first load of lumber is delivered, look at those maps! And if this property is anywhere near flooding, maybe you want to find a lot on higher ground.
~VOW
Not exactly true. There is a national flood insurance program which the government has a role in. But, it generally sucks. You can buy private flood insurance. I decided to get a private policy that satisfied the bank and gave me real protection in the event of flood (or earthquake) from Lloyd’s of London.