Navigating Hurricane Season: The Importance of Flood Insurance for Homeowners and Lenders
As hurricane season approaches, both homeowners and lenders must be prepared for the potential financial impact of these powerful storms. One critical aspect of this preparation is ensuring adequate flood insurance coverage.
Hurricane season, typically spanning from June to November, brings increased risk of high winds, heavy rainfall, and flooding. Despite the destructive potential of hurricanes, standard homeowner's insurance policies often do not cover flood damage, necessitating a separate flood insurance policy. Without flood insurance, homeowners may face insurmountable financial burdens in the aftermath of a hurricane.
Mitigating Financial Risk
When borrowers have comprehensive flood insurance, it reduces the risk of loss to both the homeowner and the lender. For lenders, this means a lower likelihood of having to absorb the costs associated with uninsured flood damage.
CPI Program Adjustments
If a borrower lacks flood insurance and their property is in a high-risk area, lenders may need to adjust their CPI programs to account for the increased risk. This could involve purchasing lender-placed flood insurance, which is typically more expensive and offers less coverage than borrower-obtained policies.
As hurricane season looms, the importance of flood insurance cannot be overstated. Both homeowners and lenders benefit from the peace of mind that comes with knowing they are prepared for whatever hurricane season might bring.
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President
ISI
tmaccurdy@isicpi.com
704-957-5024
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ISI is an administrator of Collateral Protection Insurance (CPI) and Blanket Lenders Single Interest (BLSI) for financial institutions. We provide insurance, lending, and marketing products to the financial institution marketplace. Our mission is to deliver the best products and services in the industry through responsive service, comprehensive coverage, and advanced technology. We combine the lender's vision and our proven plan to create a portfolio that matches the lender's needs for a successful program and partnership.
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