Insured Property

In flood insurance, insured property refers to the building or property that is covered under a flood insurance policy based on the insured party’s financial interest, as defined by the policy’s insuring agreement.

In lender-placed flood insurance, insured property typically arises when a lender becomes aware, or has reasonable cause to believe, that a borrower has failed to obtain or maintain required flood insurance. In this situation, the lender places insurance to protect its financial interest in the building, not the borrower’s personal interest.

Insured property may also include buildings acquired by a lender through deed in lieu of foreclosure, foreclosure, or repossession proceedings. These properties are often referred to as REO (Real Estate Owned) properties. Coverage applies strictly according to the policy terms and reflects the lender’s ownership or financial stake at the time of loss.

It is important to note that lender-placed and REO flood insurance policies primarily protect the lender, not the homeowner. Coverage is usually limited to the structure itself and may not include contents, additional living expenses, or the full replacement value of the property.

The definition of insured property is critical because it determines who is protected, what is covered, and how claims are paid following a flood loss.