The National Flood Insurance Program will implement certain changes which go into effect on June 1, 2014. The changes are primarily as a result of the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12). The Federal Emergency Management Agency (FEMA) published a summary of the changes in WYO Bulletin W-13070, dated December 16, 2013.1

Also, in WYO Bulletin W-14013, there is a link to the updated Flood Insurance Manual. This is the first blog post which will discuss some of the changes which will be effective June 1, 2014.

The maximum amount of insurance available under the NFIP for a multi-family residential building with five or more units is currently $250,000. This is the same amount available for a one-to-four family residential building.

In Section 10024 of the BW-12, effective June 1, 2014, the maximum coverage limits available for non-condominium residential buildings designed for use for other residential occupancies (multi-family dwellings of five or more families) will be increased from $250,000 to $500,000 per building. This increase is to match the limits of commercial and other non-residential properties insured under the Standard Flood Insurance Policy (SFIP) General Property Form.

While the building coverage will increase, there is no change to the maximum contents coverage for each building – it will remain at $100,000, which is the same amount for contents in commercial and other non-residential buildings. This change does not apply to Residential Condominium Building Association Policies (RCBAP) or condominium unit owners.

New premium combinations reflecting this change to the maximum limits for multi-family dwellings have been added to the Preferred Risk Policy (PRP) and PRP Eligibility Extension premium tables. These new coverage limits are available for new business, renewals or change endorsements that are effective on or after June 1, 2014.

Finally, insurers are required to send a letter to all eligible policyholders at least 90 days prior to the June 1, 2014 to inform them of the new maximum limits. They must also include a message on the Renewal Notice which advises the affected policyholders that higher limits are available.

Stay tuned for next week’s blog where I will discuss the changes to the NFIP’s definition of “primary residence.”

1 Note that changes listed in the bulletin are subject to the Homeowner Flood Insurance Affordability Act (Public Law No. 113-89) signed by the President on March 21, 2014, which rolled back many of the rate increases contained in the Biggert-Waters Flood Insurance Reform Act of 2012.

  • Cindy Head

    I just attended a webinar which stated that a side benefit to the new regulation is the flood insurance exception for detached structures on a primary residence. I can’t find when this was effective and what exactly it covers. Can you direct me to where I can find this information?

  • Shane Smith


    Regarding your question as to detached structures on a primary residence, the only language I am aware of is the following on pages 9 and 10 of the Dwelling Form:

    We insure against direct physical loss by or from flood to:

    2. Additions and extensions attached to and in contact with the dwelling by means of a rigid exterior wall, a solid load-bearing interior wall, a stairway, an elevated walkway, or a roof. At your option, additions and extensions connected by any of these methods may be separately insured. Additions and extensions attached to and in contact with the building by means of a common interior wall that is not a solid load-bearing wall are always considered part of the dwelling and cannot be separately insured.

    3. A detached garage at the described location. Coverage is limited to no more than 10% of the limit of liability on the dwelling. Use of this insurance is at your option but reduces the building limit of liability.
    We do not cover any detached garage used or held for use for residential (i.e., dwelling), business, or farming purposes.

    4. Materials and supplies to be used for construction, alteration, or repair of the dwelling or a detached garage while the materials and supplies are stored in a fully enclosed building at the described location or on an adjacent property.

  • Adam

    Will existing borrowers be required to increase their current flood insurance coverage on multi-family properties with the increase to $500,000 or will this change only effect new borrowers?