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#1771877 - 01/03/13 02:30 PM Minimum Deductibles
Jafo Offline
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In reading throught the BWA sec. 100210 talks about minimum deductibles based on the amount of coverage. Does anyone have any insight as to when this is or will be effective?
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Flood Compliance
#1771889 - 01/03/13 02:41 PM Re: Minimum Deductibles Jafo
Jerod Moyer Offline
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According to the analysis published by the ABA in July 2012, section 100210 was effective as of the date of enactment - July 6, 2012. I haven't come across or heard anything else to date.
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#1771997 - 01/03/13 04:52 PM Re: Minimum Deductibles Jafo
Jafo Offline
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Correct, so are we to force place for those that have higher deductibles than is now allowed? or am i missing something?
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#1772031 - 01/03/13 05:29 PM Re: Minimum Deductibles Jafo
Jerod Moyer Offline
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Without going back and re-reading this section, I believe it only increases the lowest available deductible. For example a policy with $1,000 minimum issued before the July BWFIR Act will increase to whatever the new minimum deductible is upon renewal.
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#1801311 - 04/04/13 01:19 PM Re: Minimum Deductibles Jafo
bstritecky Offline
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do we need to search all of our loans and request a new deductible if less than the $1000 or is it only loans going forward?

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#1801361 - 04/04/13 02:30 PM Re: Minimum Deductibles Jafo
rlcarey Offline
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If the NFIP issued the policies, the search will be fruitless. Whatever the NFIP issued is what is in effect. When the NFIP changes the deductibles that they offer to comply with the new law, that is what they will put on the declaration pages. This whole thing does not impact banks. If it is a private policy with a lower deductible, what difference would it make if the policy itself qualifies under the private insurance guidance.
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#1803425 - 04/10/13 07:49 PM Re: Minimum Deductibles rlcarey
Marnie Offline
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Biggert Waters says deductibles are based on year of contruction (up to 12/31/1974 or after 1974) and then dollar amount. So for a building contructed after 1974 and over 100,000 the minimum is $1250.00

(1) If the loan was done before 7/6/2012, can the increased deductible be obtained when the policy renews, with a notification letter? Or must we force place?

(2) If loan was done after 7/6/12, and we only required a $500 deductible, what should be done? If we forced place, and considring it was our error in light of being compliant with B iggert, we would have to pay until they get a new updated policy?

(3) Are there maximum deducitbles or is this still up to the bank?

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#1803446 - 04/10/13 08:24 PM Re: Minimum Deductibles Jafo
rlcarey Offline
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I will say this one more time - If the deductibles have been raised via the Act and they are effective from FEMA's standpoint, then the NFIP will not issue a policy with a deductible less than currently allowed by law. The minimum deductible on a specific policy is really no concern of the bank's. If the NFIP issued the policy, it is good.

As far as maximum deductibles allowed by the bank, that is a risk decision.
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#1803477 - 04/10/13 09:21 PM Re: Minimum Deductibles rlcarey
Marnie Offline
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Thank you. I didn't fully understand before.

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#1807182 - 04/23/13 01:53 PM Re: Minimum Deductibles Jafo
bstritecky Offline
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In our state, we have a housing authority program that requires a maximum deductible of no more than $1,000. Has anyone else run into this. I am assuming that the housing authority will have to change their requirment as its my understanding that NFIP will only issue a policy with a $1250 deductible if the loan is over $100,000.

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#1808945 - 04/29/13 04:13 PM Re: Minimum Deductibles Jafo
bstritecky Offline
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Bump!

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#1809632 - 04/30/13 10:18 PM Re: Minimum Deductibles Jafo
rlcarey Offline
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You are going to have to ask your housing authority that question. They are not going to be able to squeeze blood out of a turnip.
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#1875822 - 12/04/13 02:16 PM Re: Minimum Deductibles Jafo
ComplytillIdie Offline
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Am I correct in assuming that the change to the deductible is in direct correlation to the number of claims in recent years. This is an NFIP thing and not meant as a measure to protect consumers or banks. This is more of an informational piece for banks to know that,going forward, NFIP policies will have this minimum deductible. Banks can not ensure compliance with this because updating the minimum deductible is out of our control. As far as private insurance, this doesn't automatically require them to have this minimum deductible, right?

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#1875833 - 12/04/13 02:35 PM Re: Minimum Deductibles Jafo
rlcarey Offline
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Galveston, TX
That is correct. It is informational and out of the bank's control.

Like Becky S. brought up however, banks should review their loan policies and loan documents to ensure that a specified maximum deductible is not mandated that might not be possible in the future for flood insurance (the NFIP has still not to my knowledge implemented the new minimum).

You are also correct in this has no bearing on private flood insurance policies.
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