I agree with you wholeheartedly that it is the responsibility of the homeowner to educate themselves about their risks and ways of protecting themselves from those risks.

If I belabored the flood zone definition too much, it is only because you seemed quite emphatic on the point that “you CANNOT GET FLOOD INSURANCE EVEN IF YOU WANTED TO.” I only wanted to correct that for those homeowners out there who are thinking about flood insurance, but don’t live in a high risk area, and aren’t required to have it.

Your general thesis of personal responsibility is one I share.

While you and FEMA are correct that “everyone” lives in a flood plain, that statement is ambiguous at best. Everyone is at risk from something all the time. I intersected flood “zone” and “plain” not because I do not understand the difference,but because in making my original point the distinction is inconsequential.

The point isn’t the definition of a flood zone, or one’s risk.

The point is also not whether one should get flood insurance. That is up to the individual homeowner and other factors you mentioned

The point is it is not your lenders responsibility to adequately insure your home from any hazard. IT is yours. The homeowners. Blaming the lender or broker for the homeowners responsibility is shortsighted and inaccurate.

You are correct in your post regarding NFIP.

Thanks

You are right that if you are not in a flood zone, you can’t get NFIP flood insurance. From the very same site you linked, however, comes the following description of who lives in flood zones. (In the FAQ)

“What are flood zones?
Flood zones are land areas identified by the Federal Emergency Management Agency (FEMA). Each flood zone describes that land area in terms of its risk of flooding. Everyone lives in a flood zone—it’s just a question of whether you live in a low, moderate, or high risk area.”

It’s only the high risk areas that are required to have flood insurance (as long as you have a mortgage), but anyone can purchase flood insurance if they want.* I believe yours is a common misconception, evidently shared by the “mortgage broker” you are defending, so I wouldn’t really blame him either. I think some of this ambiguity stems from the unfortunate use of two very similar terms, flood plain and flood zone, which according to NFIP, mean different things.

In general it’s just always a good idea to do your research. The banks and mortgage brokers probably know pretty well what you are required to do to get a mortgage (it’s their job, after all), but that doesn’t mean that they are aware of all the options out there.

Even beyond the NFIP, however, I believe there are private insurers that offer flood policies. Some of these are conditional on already having NFIP coverage, but some are not. The market for private flood insurance is just not very big or visible since there is a huge subsidized federal program that dominates the sector.

*Caveat: Your community must be a participant in NFIP for you to purchase coverage. Generally, if there is even the remotest possibility of a flood in your area, then your community participates. Check your community on the website. If your community is not listed, and you are still worried about floods, I would suggest talking with your community government about participating, and if that fails, look for the private insurance.

A friend of mine was trying to build a house that the loan company had records showing that it was a flood zone, but the Flood Insurance people’s information showed that it wasn’t - so he couldn’t get the insurance which turned into a mess he had to fight/argue with the Loan people so he could get the house.

First, Mortgage brokers don’t “recommend” or “discourage” flood insurance.

Mortgage brokers, and all lenders for that matter, order a flood certification from usually one of two large national companies for every purchase or refinance transaction.

If the flood certification comes back ok, no flood insurance is needed OR AVAILABLE. That right, if your property is not in a FEMA designated flood zone, you CANNOT GET FLOOD INSURANCE EVEN IF YOU WANTED TO.

If the flood cert comes back as requiring flood insurance, you HAVE to purchase flood insurance. IT IS REQUIRED BY EVERY LENDER. YOU HAVE NO CHOICE.

You can’t just go buy flood insurance. You have to be in a specified flood plain determined by FEMA. You then have to purchase flood insurance from the National Flood Insurance Program NFIP. That is the only way it is done.

This flood insurance has specific, set rates and tiers which are the same all across the country. Go to http://www.floodsmart.gov and educate yourself.

Blaming your mortgage broker or bank for the fact you didn’t have flood insurance makes you look like an uninformed idiot.

The first thing that I implore of my clients and those that I know personally is to have sufficient emergency savings. This ensures that should anything happen to cause a stop to the income flow, there will be reserves to ease the pain as well as enable them to continue paying bills and lead a normal life. I recommend keeping their expenses manageable and their credit up to date and as clean as possible. In case of emergency, it will be much wasier to get credit.

Also of importance is insurance: homeowners or renters (including any disaster-related incident insurance), auto, life, disability, long-term care all depending on their unique situations. Combined with the emergency fund, this certainly helps any financial turbulance.

Another important thing that many people overlook is recordkeeping. I urge everyone I know to not only keep detailed records but also to keep multiple, electronic, off-site copies such as online and in a bank vault. This way, should any physical damage come to the home or bank, at least the electronic records will remain unscathed and in tact.

The most important thing when it comes to financial disaster is that it can occur at anytime to anyone. No one can predict how it will affect them, especially emptionally and I let people know that I am always available to them in such situations. Perhaps aside from being financially prepared, the most important thing that people need in such a predicament is emotional support.

I realize this is not quite what you are talking about here, but I value your opinion and would like to hear your thoughts:

How about the “financial disaster” that many banks have found themselves in? Examples: Fifth Third (stock sank to new low today), Wachovia, Washington Mutual, Lehman, National City, just to name a few.

How about the financial disaster they have brought to our economy and to the people who trusted them?

What about the people who are losing their homes due to foreclosure?

I am sure every one of us has a story about a bank that has taken advantage of us or tried to take advantage of us (or a friend or family member). I wonder about the people they took advantage of all these years with their quirky banking practices and ridiculous fees.

While the banks obviously had no remorse for their copious dealings at the time, I am sure that we have little sympathy for them right now as they find themsleves “overdrawn” and struggling.

Well, what comes around goes around. Sometimes it just takes a little time.

This article offers tips from disaster survivors on how to do a home inventory and also has lists you can print out and fill in:
http://whathappensnow.com/articles_show.cfm?id=239&cat=4&sub=3

I feel for these people. Just know that it does get better and easier as time goes by. There will be volunteers banging down your doors to help in time. In the mean time remember what is most important. If you have your family you truly have all you need for now!

~Jen, Katrina Survivor

Lost my wallet and had a house fire last year–things that really helped out: For the first one, had photocopied all my credit and bank cards and kept it in my files, so it was relatively painless to cancel these accounts.

For the second one, all my records were filed orderly and in a single location that, fortunately, was not damaged by fire/water. Makes it easy to call the insurance company, and refer to any records re. house property, bills, policy number, etc.

Also, during the rebuild this past year, created another set of files to specifically track every aspect of the recovery–corresp. with insurance company, fire recovery service, dry cleaners, temporary housing, county fire dept., county housing authority, mortgage company, bank (for home equity loan), and contractors who rebuilt the house.

It is helpful if you have a partner who goes through this journey with you. Support each other, remember to be polite and kind to each other, particularly when one (or the both of you) experiences a meltdown.

Friends and relatives are wonderful and can be a great support, but they are not experiencing what you are going through and you can’t expect them to. It’s ok, that’s what your partner, or perhaps a support group, is there for.

You may think that various people (insurance adjusters, county inspectors, etc.), whose jobs are to help you along the way, will do everything for you and you can just sit back and relax; however, the truth is they can never care as much as you do. Once you understand this, you can depersonalize any delay in getting work done, realize it’s just their job, not their life, like it is yours. If you depend on other people to just do their job without any prodding, you could be stuck waiting indefinitely and wondering why nothing is happening. You are responsible for making sure things stay on track, and you can do this with professionalism and politeness, but you have to stay firm, committed, and make sure that things continue to move forward in the right direction.

Eventually, life will return back to ‘normal’–when you have reupped your insurance levels and are back to grumbling about mowing the grass every other week, you can stop and smile and realize that life is amazing and you actually have absolutely nothing to worry about. As long as nobody has gotten hurt, the rest is just material stuff.

Oh–and for the financial stuff–keep on saving all the money that you can. No big vacations, new expensive hobbies, new cars, etc. Be kind to yourself and treat yourself to dinners, movies, etc. Distractions are key, but watch the big expenditures. You will need that extra money to replace necessities and pay for unexpected expenses/repairs. Wait until you’re squared away again, and then figure out your new non-crisis budget.

People actively underestimate their fragility in the name of frugality.

I’m pretty sure you can buy insurance for just about anything you want. You may not realize it, but you probably already own some meteorite insurance. If a meteorite strikes your arm, your health insurance should cover it. If it strikes your head, your life insurance should cover it. Not sure about your car or house, but I believe they would be covered as well by their respective insurances.

For your house and property, take a close look at your coverage. There should be a list of exclusions, such as floods, that are not covered. If it’s not excluded and it’s a natural or random event (meaning you did not intentionally cause it), you’re probably covered. As for the exclusions, take out additional policies for those you think you want or need.

If you live on top of a mountain, for example, you probably don’t need to worry so much about floods.

With any kind of insurance, generally the best option financially is to self-insure as much as possible. This means setting aside money for an emergency fund, and purchasing (cheaper) insurance with a high deductible. You save money over the long term this way, though you do need to have the emergency fund in place to cover the deductible, should disaster strike.

Is there any sort of “natural disaster” insurance that would cover all of these things? Would it even be worth the cost if there was?

She went to her pharmacy only to find her prescription coverage was refusing to pay for the Vancomycin. A ten-day course of meds cost $2500! It ended up that her physician held sway with the insurance company, a resource none of us can afford to overlook. By the time her doctor got through negotiating with the insurance company, my (broke) sister only had to pay $30!

I did not realize doctors had this much influence with insurance companies, but evidently sometimes they do.

Anyway what I took away from that experience is that material possessions mean very little. Family and personal relationships are the most important thing in our lives. Have a fireproof/waterproof box of important papers, some cash, bank and insurance records, and some other things you might need to grab in an emergency. And make sure you have your financial life in order (emergency fund, bills paid up, as little debt as possible).

I’m not sure you can be much more ready than that due to the nature of a crisis (cause you don’t know when where and what will hit). Just be ready to go when it hits. To me being as prepared as possible (which really isn’t much) is about the only way to recover from a crisis.

My husband was in a crash 3 months ago, and had to have emergency surgery on his knee and wrist, and then was on bedrest for almost 2 months. We have a baby who was then 3 months old, so I was not working. He had just started a new job selling cars, so had no benefits from his new job.

After many phone calls and headaches, we were able to get COBRA insurance from his old job. They hadn’t done the paperwork because they didn’t know he was no longer working there, so we were scared for a while that we wouldn’t even get COBRA. We have a high deductible plan, so we have a lot due but it’s much better than being uninsured.

We were preparing for the commission-only lifestyle, so we were in the middle of saving up a sizeable (for us) rainy-day fund. We also got a huge tax refund because of the baby, and the stimulus package. Friends and family and our church have given us a little money, too. I went back to my old job, and they let me work flexible hours and from home as much as I could. Life is still interesting and I get stressed out if I think more than a month ahead.

My husband is now almost fully recovered and looking for a job, but not having much luck. We aren’t sure why. The job market isn’t great here, but people are hiring. Maybe they are scared off by his limp and 3 months unemployment. We are going to give it a few more weeks and then start looking in other cities.

In the future, we are going to have a bigger emergency fund saved as well as always keeping our out-of-pocket max (not just our deductible) in the bank. Also, we plan to get AAA because they cover medical bills when you’re in an accident, even when you are riding in someone else’s vehicle, which is why our car insurance company wouldn’t help us.

I’m not sure how it works for supplies, but the labor would be free. They’re currently only accepting local volunteers to help now, but once they can get housing secured I’m sure non-local volunteers will be arriving.