Answers about Flood Insurance

The cost of my flood insurance policy has increased. I would like to increase my deductible to reduce the cost of flood insurance. Is this possible?

It may be possible.  You will need to discuss this with your lender.  A lender should determine the reasonableness of the deductible on a case-by-case basis, taking into account the risk that such a deductible would pose to the borrower and lender.  It is not a sound business practice for a lender to allow a borrower to use the maximum deductible amount in every situation.

A lender may not allow the borrower to use a deductible amount equal to the insurable value of the property to avoid the mandatory purchase requirement for flood insurance.

February 2011