VIP Flood Insurance Requirements
Insurance Requirements: Flood Zones and Flood Insurance
- Zone must match on flood cert AND flood policy
- Exception: we allow for discrepancy between AO and AOB zone classification between the flood cert and flood policy
- Individual Policy – Max $5,000
- Master Flood Policy – Max $25,000 per building
- Individual Policy
- $250,000 NFIP max OR
- Equal to/exceed the replacement cost coverage on the hazard policy
- Master Flood Policy – take total coverage divided by total # units for our subject property
- 100% of full replacement cost (or similar verbiage to indicate “guaranteed replacement” ) OR
- $250,000 NFIP max per unit
- Other DETACTHED structures, in addition to the main house – requires separate flood policy if it does not state that it’s included in main flood policy
- Review appraisal, photos, sketches – if structure is given a value of $5,000 or more.
- Examples: barn, guest home, large storage facility/shed, workshop, tack room, horse facilities. A permanent structure with 2 rigid walls affixed to the property counts.
- Exception: A detached garage can be covered under the same flood policy as subject property
- Separate Flood policy requirements:
- Must have flood coverage that is at least equal to the value given on appraisal for
- Example: Tack room valued at $11,000 needs a policy with $11K flood coverage
- If no value given: request appraiser for value, or insurance company to provide estimated value
- Must indicate “Other structures – (list type of structures)”. If multiple detached structures, need the structures itemized.
- Example: “Other structures – tack room and horse facilities”
- Acord, Binder, and Quotes are not acceptable
- Acceptable forms of documentation – 2 options ONLY:
- FEMA Flood Application – must fully completed and include correct info, along with listed premium, and signed by borrowers and agent for acknowledgement
- Flood Dec Page – contains all requirements, along with listed premium
- Premium payment – 2 options ONLY:
- Evidence showing 1st full year premium has been paid in full
- Evidence 1st full year premium collected and paid on final HUD-1
- Flood Hazard Notice (page 2 of flood cert) – must be signed/dated 3 days prior to closing
- Flood Servicing Disclosure – no wait period; can be signed at closing
- All borrowers’ names match final 1003 (including suffix if applicable):
- Middle initial may differ.
- Name Examples:
- 1003 shows Michael Smith, Insurance shows Mike Smith. We need insurance updated to show Michael.
- 1003 shows Michael D. Smith, Insurance shows Michael Smith. We don’t need insurance updated.
- All borrowers must appear on the policy.
- May have additional insured, if applicable (e.g., non-borrowing spouse).
- The name of the insured can be listed in any order, but must include our borrower(s) name.
- Policy Number: Required, no quotes allowed.
- Effective dates, Purchases must be on or before the funding date of the same month.
- Policy period must extend at least 12 months from date of closing.
- Effective dates, Refinances: Need at least 60 days remaining after the note (signing) date. If not, do one of the following:
- Renewal policy and collect the new premium at closing.
- Or collect current premium at closing.
- Premium payment: We cannot assume the premium is paid in full.
- We need one of the following:
- Evidence paid in full.
- Unpaid invoice or amount to collect at closing.
- Escrows Waived: Need written proof that account is paid current with no lates.
- Subject Property Address must match the 1003 and USPS.
- Primary Refinance Address: Mailing and subject addresses must match.