Texas Lender Required Flood Insurance Information

Lender required flood insurance is an issue for many Texas homeowners. When a home is located in an area of increased risk for flooding, the federal government tells lenders to require flood insurance.

When you buy a home with a mortgage it is standard procedure for the lender to get a "flood certificate" which tells if you are required to get flood coverage. A finding of higher risk of flooding will result in your realtor or lender informing you of the need for a flood policy.

FEMA is constantly working on maps to identify areas at risk of flooding. When they revise a map for a certain area, some homes will be newly rated as needing flood coverage. (And some homes that were previously rated as needing flood coverage will be re-rated as not needing it.)

If your lender requires a flood policy and they find you don't have one you will get a friendly letter about that. It will probably say that you have so many days to get coverage or they will buy it for you and add it to your loan. You DO NOT want them to buy flood coverage for you! In many cases it will be far more expensive when the lender buys it.

For lender required flood insurance I suggest getting an elevation certificate for your property. The National Flood Insurance Program (NFIP) will almost certainly be the least expensive way to get flood coverage. If you don't have an elevation certificate (EC) you may not be able to get a NFIP policy (depending on the zone you are in). Or you will be rated as being in the worst possible spot of your flood zone without the elevation certificate. Then your rate may be significantly higher than it needs to be. I recently quoted a policy that was $1,900 per year without an EC and $1,050 with the certificate.

Elevation certificates do not expire so you may be able to get an existing one from the previous owner of the home. If you need to get a new one, the price will probably be between $250 and $500. Check your yellow pages under "survey" and shop for a good price. (Please note that if you are in a low flood risk area (B or X zone) there is no need for an EC)

If you are in a hurry to get a flood policy (loan closing etc.), you may be able to get a policy without the certificate. Then when you get the certificate give it to your agent and you may be able to get a discount for the remainder of the policy term.