NEW YORK GOVERNOR SIGNS FLOOD BILL
On December 13, 2024, the New York Governor signed Assembly Bill A5073, which limits the amount of flood insurance mortgagees can require mortgagors to purchase. As presented to the Governor, the bill would prohibit mortgagees from requiring borrowers to purchase flood insurance on residential real property that exceeds the outstanding loan balance at the start of the policy year or includes coverage for contents. However, the Governor’s Approval Memorandum indicates that the Governor reached an agreement with the Legislature to revise the coverage requirement to the lesser of the outstanding loan amount or the replacement value of the property.
In addition to the coverage amount cap, the legislation also requires that borrowers be notified in writing when they are required to purchase or pay for flood insurance that the required coverage only protects the mortgagee’s interest in the property, may be insufficient to fully cover potential flood losses, and that the borrower may purchase additional coverage to protect their interest in the property.
New York is expected to provide additional information on the effective date for implementation, along with additional industry guidance.
Proctor will continue to closely monitor for updates from New York and, if Proctor provides tracking services for your entity, your relationship manager will reach out to discuss any changes that may be needed to your business rules.