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Insurance for an Outer Banks Home
If you are thinking of investing in a home on the Outer
Banks, you have probably wondered about insurance coverage
and costs. You will probably be surprised by how easy and
inexpensive it is to insure beach property.
Working with a reputable, local insurance agent is a
critical step in finding the policies that you need to adequately
cover your investment. Most homes on the Outer Banks are
covered by two or three policies to protect against the
special conditions here. It is best to use one agent for
all of the policies. Usually, you will need three types
of coverage: flood, homeowners/hazard, and wind.
Flood Insurance
Flood insurance may be required by the lender if your
home is located in federally designated flood zone. The
zones are determined based on the elevation of the lot.
Most homes are in the “AE” zone which roughly corresponds
to the “100-year floodplain.” Lots in the “C” or “X” zones
are outside of the floodplain, and most lenders do not require
flood insurance on these properties, although it is still
a good idea to have it.
The flood insurance policy of the previous owner may
be assumable by the buyer. If a new policy is written, an
elevation certificate is generally required. The seller
may have one, or a surveyor may need to prepare a new one.
Flood insurance is federally subsidized and very reasonable
in most areas on the Outer Banks. In some areas called COBRA
zones insurance is not subsidized. Although coverage is
usually available, it is quite expensive. Your real estate
agent should inform you if your property is in a COBRA zone.
Homeowners/Hazard Insurance
“Homeowner’s” insurance may be available if your house
is classified as a second home and is rented for fewer than
25 weeks each year. A homeowner’s policy, when written with
a separate wind policy, offers the broadest coverage available.
A “hazard” policy covers only named perils such as fire,
wind, smoke, etc. The coverage is less comprehensive, but
is often the best option if the home is considered an investment
property. Hazard policies usually do not cover “wind-driven
rain.” Unlike the homeowner’s policy, a hazard policy does
not cover the owner’s liability exposure. Separate policies
are needed to cover liability and “crime.”
Wind Insurance
Wind insurance is important and necessary since it is
generally excluded from homeowner’s policies. Much of the
damage caused by hurricanes is considered wind damage. On
the Outer Banks, you are far more likely to suffer a wind
loss than any other kind.
Liability
Liability insurance is not required but is prudent to
protect your assets in case a tenant becomes injured or
unhappy. Many Outer Banks owners add liability insurance
for their beach property to their primary residence policy.
Separate policies are also available through your Outer
Banks insurance agent.
Your real estate agent will work with your insurance
agent and closing attorney to see that your new investment
on the Outer Banks is properly protected.
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