BOSTON (Legal Newsline) -- Last week, Massachusetts Attorney General Martha Coakley proposed legislation that would limit the amount of mandatory flood insurance for homeowners and would cap flood insurance rates resulting from FEMA's new flood zone maps.

Coakley and House Speaker Robert DeLeo filed the proposed legislation, An Act Relative to Flood Insurance, Wednesday.

The bill would prohibit creditors from requiring homeowners to purchase flood insurance in an amount that exceeds the outstanding balance of their mortgage, requires coverage for contents or includes a deductible of less than $5,000.

Tying the amount of coverage to the outstanding mortgage balance, instead of the replacement value of the home, would lower premiums for the homeowners impacted by the new change, Coakley said.

Homeowners would still have the option of purchasing a greater amount of insurance, the attorney general noted.

"These new flood insurance changes are going to devastate many families and businesses in our coastal communities," Coakley said in a statement. "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."

The proposed legislation requires banks to provide a notice to homeowners, before paying for federally-mandated flood insurance, explaining that insurance coverage tied to the outstanding mortgage amount will only protect the current mortgage interest, and may not be sufficient to pay for repairs or property loss after a flood.

Coakley already has called for a delay in the implementation of flood insurance hikes under the Biggert-Waters Flood Insurance Reform Act of 2012.

In a letter to Congress earlier this month, the attorney general asked that the new bill be delayed until FEMA complies with Congress' mandate to undertake an affordability review and a peer review of the new flood zone maps.

Insurance rates under the new maps not only will increase for those already in the floodplain, but many homeowners and small businesses also will be required to buy flood insurance for the first time, Coakley explained.

Some are now required to purchase flood insurance at costs of $10,000 and up, the attorney general noted.

From Legal Newsline: Reach Jessica Karmasek by email at

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