[Federal Register Volume 59, Number 219 (Tuesday, November 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28154]


[[Page Unknown]]

[Federal Register: November 15, 1994]


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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

------------------------------------------------------------------------
                                             Regular program            
                               -----------------------------------------
                                  Emergency                             
                                 program\1\                 Total amount
                               -------------- Second layer    available 
                                 First layer                            
------------------------------------------------------------------------
   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 
------------------------------------------------------------------------
\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