No Title Insurance Coverage Generally If Home Is In Floodplain

Question: We purchased a home on a five-acre lot near Payson. Two months after we moved into the home there was an overflow of the nearby creek which flooded our entire backyard. Apparently 25% of our five-acre lot is in the Town of Payson’s flood plain. We immediately reviewed our title insurance policy to see if there was flood coverage, or if there was an exception to title insurance for flooding. There was no reference in our title insurance policy relating to coverage for flooding, one way or the other. The seller of the home was an elderly lady who moved to Oregon to live with her daughter, and has now passed away, so we have no claim against the Seller. If we are in a known flood plain, shouldn’t there be title insurance coverage?

Answer: Most standard title insurance policies do not provide coverage for a home located in a flood plain. For an additional cost, however, a homeowner can get a specific endorsement from the title company with coverage if the home is located in a flood plain.

Note: In a residential transaction the buyer generally pays for the mortgage lender’s title policy, and the seller pays for the buyer’s title insurance policy.