Michele
Des Moines,#2UPDATE EX-employee responds
Wed, December 12, 2007
HI Tammy, With all due respect to your insurance agent, from the lender's perspective, it is not the insurance agent who determines the appropriate amount of flood insurance to have on your home. Wells Fargo has specific guidelines set up by Freddie Mac, to whom they sell your loan on the secondary market, that determines how much flood insurance you need to have on your home. Freddie Mac requires your lender to require you to have flood insurance on your home in an equal amt, or more, than the dwelling dollar amt of insurance on your home, up to $250,000. For example, if your homeowner's dwelling coverage is $150,000, then Freddie requires your flood insurance equal at least $150,000. This is to protect you as well as the lender. If your home is destroyed as a direct result of flooding, your homeowner's insurance will not pay you anything since homeowner's policies do not cover damages from water. (If you added an endorsement for sewer back up, this would cover water damages on a restricted basis.) It is true that if it costs more than the amt of flood insurance you have to rebuild your home, then your home will not be rebuilt. You stated if your home was destroyed by flood then you would never see the additional $103,000 in coverage they made you purchase. But actual cash value is not the same as what you owe on the home. It is the market value of your home. So you would be given a check for the value of your home, up to the flood policy limit. But at least you would have some assistance to pay off your mortgage loan and hopefully some left over to help to replace your personal property, like clothes, furniture, etc. Because your homeowner's insurance will not pay for anything if the loss is the result of a flood. Since you made the choice to live in a flood zone, you should be happy to buy as much insurance as you can get if the unthinkable happens.