BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley applauded on Wednesday legislation passed unanimously by the state's House of Representatives to prevent dramatic increases in flood insurance rates.
"This bill will offer relief to homeowners who just survived the economic downturn and are still feeling the residual effects of the housing crisis," Coakley said.
"I want to thank Speaker DeLeo for filing this legislation and Representatives Michael Costello, Jim Cantwell and Garrett Bradley for continuing to shine a light on the Federal Emergency Management Agency's management of the flood insurance program. We urge the Senate to approve this legislation. Without help, homeowners throughout the commonwealth will be at risk of losing their homes and we must not let that happen."
Coakley testified on the legislation - "An Act Relative to Flood Insurance" - with House Speaker Robert DeLeo before the Joint Committee on Financial Services on Feb. 27.
The legislation, filed by Coakley and DeLeo, was co-sponsored by Representatives Cantwell, Bradley, Josh Cutler, Bruce Ayers, Tim Madden, David Vieira, Vinny deMacedo, Senator Robert Hedlund and Congresswoman Katherine Clark (D-Mass.).
The bill would prohibit creditors from requiring homeowners to purchase flood insurance in amounts that exceed the outstanding balance of their mortgage, require coverage for contents or include a deductible of less than $5,000. By tying the amount of coverage to outstanding mortgage balances rather than a higher amount, premiums would be lowered for homeowners, who would still have the option to purchase a greater amount of insurance.
In each instance where flood insurance is required, the legislation requires that notice be provided to homeowners explaining that coverage tied to the outstanding mortgage amount only protects the current mortgage interest and may not be sufficient to pay for repairs or property loss after a flood.
Proposed rate increases were postponed in January by the U.S. Senate in bi-partisan legislation calling for a FEMA assessment of the impact of an overhaul to the insurance program. FEMA announced on Feb. 5 that it would not implement higher flood insurance premiums until at least October 2015. It also announced that implementation of new flood maps in Massachusetts' Plymouth County will be postponed until at least 2015 to allow the agency more time to address appeals from affected communities.