It can be perplexing—and not least because it’s one of the
least-discussed details you run into when buying a home. The issue is flood insurance,
and it’s sometimes first brought to the fore when you are buying a home
in New
Orleans that
you would not have thought was on a “flood plain.” If it is, it’s going to
require flood insurance before the bank will sign off on a loan.
As we only see from time to time, devastating floods can strike
when and where least expected: sometimes, in areas where that ruinous flooding
is unprecedented. In 2005, when FEMA paid out over $17 billion in flood claims,
it once again became clear why flood insurance is absolutely necessary. Here’s
what you need to know about flood insurance if the home you are looking at is
in a flood plain.
The Zone Matters
FEMA assigns different zones within a single flood plain. For
example, homes that are located on the bank of a creek may be assigned to Zone
A, ( floods highly likely). Homes that are further away from a water source may
be assigned to Zone Z, (lower risk). Naturally, Zone Z premiums are a good deal
more affordable than premiums for Zone A. In fact, if your home is in a Z zone,
you may even qualify for a special price break for two years before full
premium goes into effect.
Figuring Out the Cost
Unlike car or home insurance, you won’t find a better rate on
flood insurance by shopping around. The federal government sets flood premium
rates based on factors like the zone, the home’s value, and the value of its
contents. You may choose to insure the home only, but it’s seldom a good idea
to leave contents without coverage. Any New Orleans insurance agent
specializing in flood insurance will be able to assist you in determining the
cost of the policy; they will also answer any questions you may have about the
process.
Making Your Decision
Buying a New Orleans home that turns out to be on considered within a flood
plain means factoring in some added insurance expense, and possibly even
potential risk to your personal items. But when the house is right, and your
heart is absolutely set on the property, it’s a dollars-and-cents calculation.
I’m always at the ready to help my clients clarify this and all other the other
details that go into buying a home in New Orleans.
Terez Harris NOLA Real Estate Group
(504)297-2619
Keller Williams Realty New Orleans 8601 Leake Ave. New Orleans, LA 70118 504-862-0100
Each office independently owned and operated. All brokers licensed in the state of Louisiana.
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