While coastal cities are seeing firsthand the effects of seawater encroachment due to climate change, inland areas are also experiencing a flux in the demarcation of flood zones. As homes further and further from the water’s edge are deemed in need of flood insurance, lenders can be sure their real estate investments remain protected through lender placed insurance.
Homeowners often have no warning that they suddenly need a flood insurance policy, or that the premium of their existing policy has increased dramatically. Some may not be able to pay, and will instead neglect to purchase coverage or will let their policies expire. By purchasing automatic coverage, a lender ensures that a home is covered, back-dated to the time the owner’s insurance first lapsed.
Homes acquired through foreclosure can easily be protected through a low-cost blanket policy. This type of lender placed insurance does not require individual home inspections, and can be written to include the following hazards besides just flooding:
- General liability
- Damage to building materials
As someone who deals with real estate on a regular basis, you know the risks of being uninsured. Don’t expect all your clients to have the same knowledge as you have; instead, simply protect yourself with lender placed insurance.