Flood insurance is something that there are many questions floating around about. Some homeowners believe that their regular home insurance covers flooding, but unfortunately, it does not. Another question that some people have is whether a lender can require you to purchase flood insurance. Here at Saucon Insurance Agency, serving the greater Bethlehem, PA area, we want you to fully understand whether you can be required to purchase flood insurance. Here is what you need to know about this topic.
Can a Lender Require You to Purchase Flood Insurance?
When you take out a loan for your home, the lender has to protect their interest in the home. After all, if you fail to make your payments, foreclosing on and selling your home is the lender’s way of recovering their money. As such, a lender can require you to purchase flood insurance. Many lenders require this for homes that are built on a flood plain or an area that is susceptible to flooding.
How Do You Know if Your Lender Requires Flood Insurance?
If your lender requires flood insurance, it will be in your lending contract. You should carefully read over this contract before you close on your home to see what the lender requires of you, including, but not limited to, carry home insurance and carrying flood insurance. If the original lending contract does not list flood insurance as a requirement, the lender cannot require it of you unless you refinance your home or make changes to your existing mortgage.
Is your lender requiring you to purchase flood insurance or are you simply interested in protecting your home? Then contact Saucon Insurance Agency. We can help to answer any additional questions you have about flood insurance in the greater Bethlehem, PA area, and help you find the flood insurance policy that is ideal for you. Call us now to get started.