Some Michigan residents are boiling mad that their mortgage lenders are forcing them to purchase flood insurance. The notifications were sent out to residents as a result of FEMA’s adoption of updated flood maps. There is, however, good news here.
Consumers have options. FEMA is certainly not infallible. The maps may not be accurate (I know it’s hard to believe) and homeowners can hire their own property surveyors to determine if they are in a floodplain and how likely it is that a flood will occur on their property. With these actions they may be able to avoid the mandatory purchase of flood insurance or at least they can reduce the cost by giving details about the risk of flood (as I wrote in an earlier blog post insurers can charge less when they are more certain of the risks). Additionally, the more residents who assess the risks associated with their property provide more thorough details for their insurance companies which means that these companies can come closer to risk-based-rates for all of their customers and potentially charge less for everyone as the result of higher profits.
In addition, some consumers who have their property surveyed might find out that they are not in a flood zone though they thought they were and had already purchased flood insurance–in which case they can have their premiums refunded from the previous and current year.
On the flip side, some residents who have their properties surveyed might just find out that they are indeed in a flood plain and they may have to purchase flood insurance. But how “bad” is it really when people are forced to calculate and prepare for a hazard that is very likely to occur?