What is Transferable Flood Insurance...

...and how will it impact your home purchase?

Smart home buyers and sellers look for every possible advantage when negotiating the purchase of a home. What if there were an advantage that would benefit everyone?

We've asked the professionals at Barfield Insurance to step in this week to explain how a transferable flood insurance policy makes a home more appealing by significantly reducing buyer costs:

It's no secret that the insurance marketplace in Florida can be difficult to navigate. That's why it's important to work with professionals who understand the different tools available for you to use to keep your insurance costs affordable. One of these techniques has to do with the assumption of flood insurance policies. First, some background. All homes are either in a low-risk flood zone or a high-risk flood zone. If you plan to have a mortgage on your home and the home is in a high-risk flood zone, you will be required to purchase a flood insurance policy. When choosing a flood insurance policy you will have two major categories of flood policies to choose from; National Flood Insurance Program policies (NFIP) or Private market flood policies. Of these two options, only the NFIP policies can be assumed. But why might you want to assume someone else's NFIP flood insurance policy? In October of 2021 FEMA, the entity who administers the NFIP, rolled out a major pricing change for all NFIP flood insurance policies. In short, many homes experienced significant rate increases on their flood insurance premiums. However, FEMA didn't require flood policyowners to increase their premiums to the new rate all at once. FEMA allows them to gradually increase their premium to the new rate over time (the maximum rate increase for most NFIP policies is 18% per year). For example: If I have a flood policy on my home that is priced at $1,200 now, but the new rate should really be $4,200, then my rate will increase by approximately 18% per year until I reach the full premium of $4,200. So, next year the premium will be $1,416 ($1,200 times 1.18) and so on. Knowing all of this, it would be convenient if the buyer of a home could have the $1,200 premium now and not the $4,200 premium. This is where assuming a flood policy can be very beneficial. The seller and the buyer can sign one simple form transferring the NFIP flood policy from the seller to the buyer. This allows the buyer to take advantage of the lower premium on the existing NFIP flood policy. The bottom line: If you are buying a home in a high-risk flood zone, get a copy of the seller's flood insurance policy and get it over to us to review for transferability.

Team Barfield, Barfield Insurance 863.662.3134 jwb3@insurewithbarfield.com www.teambarfield.com

Sellers, don't miss the opportunity to easily make your home more attractive to buyers. Buyers, make sure you ask about this option to lock in years of savings on future insurance costs.