Legal Question in Real Estate Law in California
I purchased a home in January of 2014. When the home was in escrow I found out that it was in a flood zone but supposedly it was not really in a flood zone according to FEMA. Only a small portion of the backyard was actually in the flood zone, not the dwelling. I decided to contact my insurance to find out how much flood insurance would be for the home before making a decision. I was told it would be $400 at first, then the lender demanded insurance for flood zone A, and the quote went up to $1278. I did not like that number but I liked the home and figured an extra 100 every month for a while would be ok. So I closed escrow on the home.
Two weeks after closing escrow on the home and financing only 50% of the purchase price I called my insurance company to find out if they had heard anything on the request from the insurance company to FEMA to reconsider based on the elevation certificate. They told me that they did not receive anything about the reconsideration of the zone, but that they had some not so good news for me. This is when she proceeded to tell me that the flood insurance for the home was now $7700 per year. I about flipped my lid and asked them how this could possibly happen, and that I was quoted $1278 for the insurance and that was high. She just told me that she did not know and the new ruling has caused fema to raise their rates. If I had been quoted that $7700 prior to closing I would NEVER have bought the home. But conveniently two weeks after I close escrow and am now stuck owning the home I get an insurance bill that will cost me $200 a month more than my actual mortgage payment.
So my question is this - Do I have any legal recourse? If flood insurance on this home will run that much there is no way I can ever sell the house, because most people wouldnt touch a home that has an insurance premium that high. I dont know what to do or whether I have any kind of legal protection in this sort of a situation. And shouldnt the insurance company be held accountable for the quote they provided to me? I have all the correspondence from the insurance company that shows the quotes. The insurance company I deal with is State Farm.
1 Answer from Attorneys
I would treat this as an insurance pricing and sales matter at least initially, rather than as a possible legal action. Possibly this is a genuine FEMA-reconsideration matter, or about equally likely, someone at your insurance company made a mistake. I'd suggest detailed in-person conversations with the higher-ups at your insurance agency, followed by (perhaps) talks with other insurance sellers with both the same company and a different insurance company to see if you can begin to get some consistent answers that sound like the truth. Also, you might be able to get some worthwhile assistance from a consumer advocate at a regional FEMA office.
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