At Attain Insurance, serving the greater Fort Payne, AL area, we are often asked if a lending company can require you to carry flood insurance on your home. This is something that many people do not know about, but should before they purchase their first home or a home in a high-risk flood area. Here is information regarding lenders and their ability to mandate you to carry flood insurance.
Can You Be Required to Carry Flood Insurance?
By law, you can be required by a lending agency to carry flood insurance if you have a federally backed mortgage or if you live in a high-risk flood area. If you do not meet either of these requirements, the lender can encourage you to obtain flood insurance, but cannot require it.
How Will I Know If I Am Required to Carry Flood Insurance?
If you are required to carry flood insurance by your lending agency, this information will be disclosed to you when you sign your loan documents. If it is not in the agreement, you are not required to carry this type of insurance.
Do I Have to Use the Lender’s Insurance Company?
If you are required to carry flood insurance, the lender will give you the option of buying the insurance directly through one of their preferred insurance companies. You are under no obligation to buy insurance from or recommended by the lending company.
Regardless of whether or not a lending company requires you to carry flood insurance, it is always strongly advised that you do. If you are in the greater Fort Payne, AL area and do not currently have flood insurance, contact Attain Insurance today to obtain a quote and begin the process of protecting your home against a flood.