Everyone knows the golden rule of real estate: "Location, location, location." But that's also one of the golden rules of insurance. If you live in a city with a high rate of car accidents and thefts, for instance, you can expect to pay more for your car insurance premiums. It's understandable that insurers would adjust premiums based on regional trends, but it's also not entirely fair: A safe driver who parks in a locked garage is still going to pay high premiums if he or she lives in a city like Washington, D.C.
And it turns out the calculus for determining whether you need to buy flood insurance can also be unfair.
As the Today Show reports, some homeowners are being forced to buy flood insurance even if they aren't in a flood zone. The program spoke to Nancy and Mike Heath, a couple who were told they needed to buy the insurance despite the fact that their house is situated atop a hill, far from any running water.
How did this happen? The short version: It's the government's fault.
Flood insurance is purchased through the government's National Flood Insurance Program, and is based on FEMA's flood maps. Unfortunately, it seems that many of these maps are hopelessly out of date. The Heaths, for instance, were told they were in a flood zone based on a flood map more than three decades old, and which showed that there was a creek running through their house. Obviously, there is no creek running through their house.
These are mistakes that can cost homeowners tens of thousands of dollars if they're forced to buy the insurance to take out a mortgage. But the good news is that you aren't completely helpless if you've been erroneously placed in a flood zone -- you can file an appeal with FEMA, and use local records and a land surveyor to bolster your case. Given how much money is at stake, you don't want to just accept the judgment of an obsolete government map.
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