Do Mortgage Loans Require Hurricane Insurance Coverage?

Acquiring a mortgage will require you to cross many hurdles to get to the finish line. Among those hurdles is the task of finding affordable insurance for your property. While homeowners living in non-coastal areas may be free from worrying about hurricanes, if your home is located in a coastal area, you may be required to get special insurance to close on your loan.

Major hurricanes have been responsible for billions of dollars of property damage across the United States, with storm surges, strong winds, tornadoes and hailstorms. Additionally, hurricanes are the most common cause of flooding. While hurricane damage causes a wide array of damage, there is no one-size-fits-all hurricane policy or coverage. Instead, depending on where you live, you may be required to carry multiple insurance policies to obtain a mortgage.

Homeowners coverage varies greatly, so knowing what's included is the first step to understanding what additional coverage you'll need to maintain. Some homeowners policies will cover fire, theft and water damage from a plumbing failure as well as wind and hail. If your policy doesn't cover wind and hail, you'll need to find an additional policy with the guidance of your insurance agent. No homeowners insurance policy, however, will cover flood damage.

If you plan to purchase a property located in special or high-risk flood zone and secure it with a federally backed mortgage, your lender will require you to have flood insurance in addition to homeowners insurance. Your insurance agent will identify what flood zone the property is located in and give you a premium rate. The government-run National Flood Insurance Program sets rates uniformly throughout the country based on flood zone. To get an estimate yourself, you can complete a one-step flood risk profile on the program's website by entering the property address.

Hurricane insurance essentially comprises a variety of insurance coverage and will depend on the location of your home. In coastal areas like Florida, Louisiana or Texas, securing homeowners insurance may be challenging or cost prohibitive if the number of insurance carriers writing policies has decreased. Your best defense will be conducting your own research and comparing premium rates, deductibles and coverage. Additionally, research any discounts available to you for storm-proof features such as hurricane-resistant windows or shutters and hurricane wind-resistant roofing.

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