Bill aims to cap flood insurance rates as a result of the new FEMA flood insurance maps
Attorney General Martha Coakley announced today that she and House Speaker Robert DeLeo have filed proposed legislation today entitled An Act Relative to Flood Insurance. The proposed bill aims to cap the amount of flood insurance mortgage lenders required from homeowners. In addition, it would also prohibit creditors from requiring that homeowners purchase flood insurance in amounts that exceed the outstanding balance of their mortgage, and/or that would require coverage for contents and includes a deductible less than $5,000 dollars.
“As Speaker of the House and a representative of a coastal community I have become increasingly concerned about the changes being implemented by FEMA regarding flood insurance,” said House Speaker Robert A. DeLeo. “My priority is protecting Massachusetts businesses and families, whom Washington’s new system puts into peril. I am pleased to work with Attorney General Coakley to do what we can to resolve this problem at a state level.”
AG Coakley and House Speaker DeLeo believe that tying the amount of coverage to a homeowner’s outstanding mortgage balance rather than the replacement value of the home, would overall lower premiums for Mass. homeowners affected by the new change in the FEMA maps. They also note that the proposed bill would in no way prevent a homeowner from being able to purchase a greater amount of flood insurance if they so choose.
“These new flood insurance changes are going to devastate many families and businesses in our coastal communities,” AG Coakley said. “We continue to urge the federal government to delay implementing these changes until they’ve followed all the steps required by law. In the meantime, this state legislation can help mitigate the impact of these costs on families and businesses. I want to thank Speaker DeLeo for his leadership on this issue, and also thank Representatives Cantwell and Bradley and Senator Hedlund for continuing to shine a light on the impact of these significant policy changes.”
Why this proposed legislation now?
Both Coakley and DeLeo have been critical of the Biggert-Waters Flood Insurance Reform Act of 2012 and in particular how the changes in flood zone maps now require many new Massachusetts homeowners to purchase flood insurance, often at costs of $10,000 and up.
Attorney Coakley went so far as to send a letter to Congress requesting a delay in the implementation of flood insurance hikes until the Federal Emergency Management Agency (FEMA) complies with its duty to conduct an affordability review as well as a peer review regarding the new flood zone maps. The Attorney General says that the combined effect of eliminating federal subsidies for homeowners under the National Flood Insurance Program, along with the increasing the size and breadth of homeowners who will be required to purchase mandatory flood insurance will foster many more economic hardships for a larger number of homeowners.
“Flood insurance is compulsory for property owners with mortgages located in certain zones on Flood Insurance Rate Maps. These homeowners and businesses have no choice, nor do the banks that service their mortgages, but to have flood insurance. Even properties in the new flood zones that do not have mortgages may still be affected, due to heightened building requirements or lower market demand for those properties.”