Flood Insurance Dwelling Policy

When it comes to flood insurance, lenders need to have an awareness of the type of policy they require and what it covers. For instance, one of the key features of a Dwelling Policy is that it will pay replacement cost value (RCV) but only if certain conditions are met. RCV is what it takes to get your home back to the way it was based on what the materials cost today. If the conditions aren’t met, then a Dwelling Policy will only pay actual cash value (ACV) which factors in depreciation. If a lender knows the property will not meet the conditions, it doesn’t make sense to have the borrower buy a Dwelling Policy because it will never pay RCV.

David explains more in the video.

Video Highlights:

• A Flood Dwelling Policy pays replacement cost if certain conditions are met.
• For example, the property must be the borrower’s primary dwelling; it must be “fully insured” and be a single-unit dwelling.
• If the conditions are not met, the policy will pay the actual cash value.

Published
2023/07/24