AG Coakley Applauds Signing of Flood Insurance Legislation into Law
BOSTON – Following Governor Patrick’s signing of legislation, filed by Attorney General Martha Coakley and House Speaker Robert DeLeo to prevent dramatic increases in flood insurance premiums, AG Coakley issued this statement:
“The proposed federal flood insurance changes were inherently unfair to thousands of Massachusetts families. This new law, combined with recent changes to the National Flood Insurance program, will offer greater protection to families who could face unsustainable rate increases through no fault of their own. I extend my thanks to Speaker DeLeo for his leadership and partnership on this important bill, to members of the House and Senate for their support, and to the Governor for signing this into law. ”
AG Coakley testified with Speaker DeLeo on their legislation, An Act Relative to Flood Insurance before the Joint Committee on Financial Services on February 27. The legislation was filed by AG Coakley and Speaker DeLeo, and co-sponsored by Representatives Cantwell, Bradley, Josh Cutler, Bruce Ayers, Tim Madden, David Vieira, Vinny deMacedo, Senator Robert Hedlund, and Congresswoman Katherine Clark, who previously served as a state senator. In March 2014, the House of Representatives unanimously passed the legislation. The bill passed the Senate in June 2014.
The new law prohibits creditors from requiring homeowners to purchase flood insurance in an amount that exceeds the outstanding balance of a mortgage, or the value of a home equity line of credit. Additionally, it prevents creditors from requiring flood insurance to cover contents of a home, and bars policies from having deductibles less than $5,000.
Tying the amount of required coverage to the outstanding mortgage balance, instead of a higher amount, will keep premiums lower for homeowners in the National Flood Insurance Program. Homeowners will still have the option of purchasing a greater amount of insurance.
The law requires, in each instance flood insurance is required, a notice to be provided to homeowners explaining that insurance coverage will only protect the creditor or lender’s interest in the property, and may not be sufficient to pay for repairs or property loss after a flood.
The new law will take effect 120 days after being signed by the Governor.
In March, President Obama signed into law bi-partisan legislation that limits rate increases to 18 percent per year, and calls on FEMA to limit premiums to 1 percent of the total coverage of each policy.