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
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.