How Mortgage Brokers Can Stand Out by Understanding Flood Insurance Options
- FloodPrice
- Feb 5, 2021
- 3 min read
Updated: 2 days ago
As a mortgage broker, guiding clients through the home-buying process involves more than just securing a loan. Anticipating the hidden hurdles that can disrupt a closing is key to assisting your borrower. One often-overlooked aspect that can impact closings is flood insurance. Properties in high-risk flood zones often require flood insurance, especially when financed through federally backed loans. If the borrower doesn’t secure the necessary policy, or if the insurance company declines coverage due to the risk, the loan can be delayed or even fall apart entirely.
Being knowledgeable about flood insurance options can help you prevent delays and provide added value to your clients.
Why Flood Insurance Matters in Home Financing
Flood insurance is mandatory for properties located in Special Flood Hazard Areas (SFHAs) when the mortgage is from a federally regulated or insured lender. This requirement stems from the Flood Disaster Protection Act of 1973.
The cost of a flood policy can impact a borrower’s qualifications in ways that aren’t immediately obvious. Premiums can be steep, particularly in high-risk areas or properties recently remapped by FEMA. If your borrower didn’t budget for a flood policy, the added expense could push their debt-to-income ratio over the limit, making the loan unworkable. As a broker, it's crucial to flag flood zone issues early and educate clients on the potential financial impact. Doing so can mean the difference between a smooth closing and a loan that never makes it to the table.
Exploring Flood Insurance Options: NFIP vs. Private Policies
While the National Flood Insurance Program (NFIP), managed by FEMA, was previously the standard provider for flood insurance, it’s no longer the only option. Private flood insurance options have become increasingly available, offering more flexibility when it comes to coverage, pricing, and underwriting guidelines.
NFIP Flood Insurance
Coverage Limits: Up to $250,000 for the building and $100,000 for contents.
Standardized Rates: Based on Risk Rating 2.0.
30-Day Waiting Period: Policies typically take effect 30 days after purchase, unless required for a loan closing.
Private Flood Insurance
Higher Coverage Limits: Most carriers offer higher limits than the NFIP, often up to 4 million for building coverage. This can be beneficial for high-value properties.
Broader Coverage Options: Options may include temporary living expenses if the homeowner is displaced due to a flood, and coverage for basement contents or detached structures.
Shorter Waiting Periods: Policies can become effective immediately when tied to a loan closing.
It's important to note that most private flood insurance policies are designed to meet lender requirements, including providing coverage equivalent to NFIP policies and insurer financial strength ratings.
FloodPrice offers both NFIP and private flood insurance! You can quickly and easily quote both with one application. View your rates side-by-side entirely online. Give it a try: Get a Quote
Benefits of Offering Flood Insurance Guidance
By educating yourself on flood insurance options, you can:
Prevent Closing Delays: Addressing flood insurance requirements early can keep transactions on schedule.
Enhance Client Trust: Providing comprehensive information demonstrates professionalism and care.
Differentiate Your Services: Offering insights into both NFIP and private options can set you apart from competitors.
Partnering with FloodPrice
Flood insurance can be overwhelming, especially for insurance agents who don’t work with it regularly. That’s where FloodPrice comes in. As a trusted partner that specializes in flood insurance, we take the complexity out of the process, giving you a reliable resource for clear guidance, fast quotes, and the support you need.
Here’s why mortgage brokers choose to work with us:
One platform, multiple options: We provide quotes from both the NFIP and trusted private insurers side by side, helping your clients compare coverage in minutes.
Fast, online quoting: Our easy-to-use digital tool lets clients get flood insurance quotes fast, often in just a few clicks.
No surprises: We highlight key coverage differences (like policy limits, waiting periods, and optional add-ons) so your clients know exactly what they’re getting.
Support when you need it: Our Flood Experts are here to help with questions, offer guidance on policy options, and make sure you and your clients stay on track for closing.
When partnering with FloodPrice, you’re not just checking off a box, you’re giving your clients a better experience and showing them that you’re prepared for anything that comes up in the process.
Empower Your Clients with Informed Choices
Understanding the nuances of flood insurance allows you to better serve your clients and ensure smoother homebuying experiences. By staying informed and proactive, you position yourself as a valuable resource in the real estate transaction process.
Get Your Flood Insurance Quote in Minutes
Our online quote tool shows you rates from the NFIP and trusted private insurers side-by-side, making it easy to find great coverage at the right price.
