National Flood Insurance Program; Insurance Coverage and Rates

FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Part 61

RIN 3067-AC29

National Flood Insurance Program; Insurance Coverage and Rates

AGENCY: Federal Insurance Administration, FEMA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend the National Flood Insurance

Program (NFIP) regulations to increase the waiting period before which

flood insurance coverage becomes effective under the Standard Flood

Insurance Policy and to increase the limits of coverage available under

the NFIP. This proposed rule is necessary to comply with the waiting

period requirement and maximum flood insurance coverage amounts

established by the National Flood Insurance Reform Act of 1994 (Title V

of Pub. L. 103-325). The intended effect of this proposed rule is to

establish a 30-day waiting period, with certain exceptions, before

which flood insurance coverage becomes effective under the Standard

Flood Insurance Policy and to provide higher limits of flood insurance

coverage to current and new policyholders. In this proposed rule, FEMA

is also requesting comments regarding a study it is conducting on the

waiting period as required by section 579 of the National Flood

Insurance Reform Act of 1994.

DATES: Comments are requested and must be received by December 30,

1994.

ADDRESSES: Comments should be sent to the Rules Docket Clerk, Office of

the General Counsel, Federal Emergency Management Agency, 500 C Street,

SW., room 840, Washington, DC 20472, (fax) (202) 646-4536.

FOR FURTHER INFORMATION CONTACT: Charles M. Plaxico, Jr., Federal

Emergency Management Agency, Federal Insurance Administration, 500 C

Street, SW., Washington, DC 20472, (202) 646-3422.

SUPPLEMENTARY INFORMATION: In the National Flood Insurance Reform Act

of 1994 (the Reform Act), Congress reacted to the flooding which has

occurred in recent years (particularly the Midwest flooding in the

summer of 1993 and the amount of advance warning which people

downstream of the flooding had in excess of the 5-day waiting period

then and currently in effect), by enacting legislation requiring a 30-

day waiting period, with two exceptions.

One exception to the 30-day waiting period authorized by Congress

applies to the initial purchase of flood insurance in connection with

the making, increasing, extension, or renewal of a loan. In such an

instance, the coverage with respect to the property which is the

subject of the loan shall be effective as of the time of the loan

closing, provided the flood insurance policy is applied for and the

presentment of payment of premium is made at or prior to the loan

closing.

The other exception to the 30-day waiting period authorized by

Congress applies to the initial purchase of flood insurance during the

one-year period following the issuance of a revised flood map for a

community. In such an instance, the coverage is to be effective at

12:01 a.m. (local time) on the first calendar day after the application

date and the presentment of payment of premium. The Reform Act provides

that the one-year period starts on the date of publication of the

notice of the revision and requires that the notice be published not

later than 30 days after the effective date of the map revision. Since

agents using flood maps automatically get copies of revised maps with

the effective date of the revision shown on the map but may not see the

new notice that is required, FEMA is interpreting the period for this

exception to be the 13-month period beginning on the effective date of

the map revision.

The current exception to the waiting period provision when a flood

insurance policy is to be issued as a ``companion policy'' to another

policy such as a homeowners policy or a standard fire insurance policy

is not authorized by the Reform Act. Therefore, this rule proposes to

remove the provisions currently in Sec. 61.11(f)(1) regarding the

calculation of the waiting period when the flood insurance policy is to

be issued with an effective date to be identical to a ``companion

policy.''

In the Reform Act, Congress also increased the maximum limits of

coverage available under the NFIP. The new maximum limits of building

coverage are $250,000 for residential structures and $500,000 for all

other structures and the new maximum limits of coverage are $100,000

for contents in residential structures and $500,000 for contents in

nonresidential structures. With respect to a residential condominium

building in a regular program community, the maximum limit of building

coverage is $250,000 times the number of units in the building (not to

exceed the building's replacement cost). The last time Congress

increased the coverage limits was in the Housing and Community

Development Act of 1977 (Pub. L. 95-128).

In the Reform Act, Congress also required FEMA to conduct a study

to determine the appropriateness of existing requirements regarding the

effective date and time of coverage under flood insurance contracts

obtained through the national flood insurance program. Congress

stipulated that, in conducting the study, the Director shall determine

whether any delay between the time of purchase of flood insurance

coverage and the time of initial effectiveness of the coverage should

differ for various classes of properties (based upon the type of

property, location of the property, or any other factors related to the

property) or for various circumstances under which such insurance was

purchased. FEMA invites comments from the public on any aspects of the

waiting period which they consider to be germane. FEMA will consider

any comments received as it conducts the study.

National Environmental Policy Act

This proposed rule is categorically excluded from the requirements

of 44 CFR Part 10, Environmental Consideration. No environmental impact

assessment has been prepared.

Executive Order 12898, Environmental Justice

The socioeconomic conditions relating to this proposed rule were

reviewed and a finding was made that no disproportionately high and

adverse effect on minority or low income populations result from this

proposed rule.

Executive Order 12866, Regulatory Planning and Review

This proposed rule is not a significant regulatory action within

the meaning of Sec. 2(f) of E.O. 12866 of September 30, 1993, 58 FR

51735, and has not been reviewed by the Office of Management and

Budget. Nevertheless, this proposed rule adheres to the regulatory

principles set forth in E.O. 12866.

Paperwork Reduction Act

This proposed rule does not contain a collection of information

requirement as described in section 3504(h) of the Paperwork Reduction

Act.

Executive Order 12612, Federalism

This proposed rule involves no policies that have federalism

implications under Executive Order 12612, Federalism, dated October 26,

1987.

Executive Order 12778, Civil Justice Reform

This proposed rule meets the applicable standards of section

2(b)(2) of Executive Order 12778.

List of Subjects in 44 CFR Part 61

Flood insurance

Accordingly, 44 CFR part 61 is proposed to be amended as follows:

PART 61--INSURANCE COVERAGE AND RATES

1. The authority citation for Part 61 continues to read as follows:

Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of

1978, 43 FR 41943, 3 CFR, 1978 Comp., p. 329; E.O. 12127 of Mar. 31,

1979, 44 FR 19367, 3 CFR, 1979 Comp., p. 376.

2. Section 61.6 is revised to read as follows:

Sec. 61.6 Maximum amounts of coverage available.

(a) Pursuant to section 1306 of the Act, the following are the

limits of coverage available under the emergency program and under the

regular program. Regular Program

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Regular program

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Emergency

program\1\ Total amount

-------------- Second layer available

First layer

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Single Family Residential

Except in Hawaii, Alaska,

Guam, U.S. Virgin Islands.... 35,000 215,000 250,000

In Hawaii, Alaska, Guam, U.S.

Virgin Islands............... 50,000 200,000 250,000

Other Residential

Except in Hawaii, Alaska,

Guam, U.S. Virgin Islands.... 100,000 150,000 250,000

In Hawaii, Alaska, Guam, U.S.

Virgin Islands............... 150,000 100,000 250,000

Nonresidential

Small business................ 100,000 400,000 500,000

Churches and other properties. 100,000 400,000 500,000

Contents\2\

Residential................... 10,000 90,000 100,000

Small business................ 100,000 400,000 500,000

Churches, other properties.... 100,000 400,000 500,000

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\1\1 Only first layer available under emergency program.

\2\Per unit.

(b) In the insuring of a residential condominium building in a

regular program community, the maximum limit of building coverage is

$250,000 times the number of units in the building (not to exceed the

building's replacement cost).

2. Section 61.11 is amended as follows:

a. By revising paragraphs (a), (b), and (c) to read as follows:

Sec. 61.11 Effective date and time of coverage under the Standard

Flood Insurance Policy--New Business Applications and Endorsements.

(a) During the one-year period following the issuance of a revised

Flood Hazard Boundary Map or Flood Insurance Rate Map for a community,

the effective date and time of any new flood insurance coverage shall

be 12:01 a.m. (local time) on the first calendar day after the

application date and the presentment of payment of premium; for

example, a flood insurance policy applied for with the payment of the

premium on May 1 will become effective at 12:01 a.m. on May 2.

(b) Where the initial purchase of flood insurance is in connection

with the making, increasing, extension, or renewal of a loan, the

coverage with respect to the property which is the subject of the loan

shall be effective as of the time of the loan closing, provided the

written request for the coverage is received by the NFIP when the flood

insurance policy is applied for and the presentment of payment of

premium is made at or prior to the loan closing.

(c) Except as provided by paragraphs (a) and (b) of this section,

the effective date and time of any new policy or added coverage or

increase in the amount of coverage shall be 12:01 a.m. (local time) on

the 30th calendar day after the application date and the presentment of

payment of premium; for example, a flood insurance policy applied for

with the payment of the premium on May 1 will become effective at 12:01

a.m. on May 31.

* * * * *

Sec. 61.11 [Amended]

b. In paragraph (e), by removing, in the second sentence, the

phrase ``(P.O. Box 459, Lanham, Maryland 20706)''.

c. By removing paragraphs (f) (1) and (2) and by redesignating

paragraph (f)(3) as paragraph (g).

d. In newly redesignated paragraph (g), remove the word ``this''.

(Catalog of Federal Domestic Assistance No. 83.100, ``Flood

Insurance'')

Dated: November 7, 1994.

Elaine A. McReynolds,

Administrator, Federal Insurance Administration.

[FR Doc. 94-28154 Filed 11-14-94; 8:45 am]

BILLING CODE 6718-05-P