In an effort to reduce barriers to buying flood insurance, the Federal Emergency Management Agency has announced that the National Flood Insurance Program will begin accepting monthly payments. The new rule goes into effect Dec. 31.
Since the Flood Insurance Program’s inception in 1968 FEMA has always required full payment at application or renewal of a policy. The Homeowners Flood Insurance Affordability Act of 2014 contained language that allowed monthly payments, but FEMA has been slow in implementing that option. FEMA now says that monthly premiums will “expand access to flood insurance.”
This year there are 4.7 million Flood Insurance Program policies in force, of which 3.2 million are residential and 1.1 million involve condominiums. Many current mortgage holders do pay into an escrow account for annual flood insurance payments, but FEMA data shows that 1.8 million policyholders do not have a mortgage and do not pay into cash reserves of condo associations. They currently make annual payments at policy inception or renewal. This will provide a new option.
The Nov. 1 notice in the Federal Register can be found here.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
