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NFIP broadens PRP flood ins. coverage NCUA
ALEXANDRIA, Va. (12/8/10)--The National Credit Union Administration (NCUA) has alerted credit unions that pending flood insurance changes set forth by the Federal Emergency Management Agency (FEMA) “could result in cost savings” for credit union real estate borrowers. FEMA recently agreed to extend preferred risk policies (PRP) to owners of properties that are located in so-called Special Flood Hazard Areas (SFHA). The PRPs, which are made available under the National flood Insurance Plan (NFIP), offer low-cost flood insurance to owners and tenants of eligible residential and non-residential buildings located in moderate to low flood risk areas, according to a FEMA release. The PRPs will allow these property owners to maintain lower-cost flood insurance policies for an extended period, the NCUA said. Insurers, not credit unions, will be charged with determining eligibility for these policies. However, credit unions will need to ensure that each borrower’s amount of flood insurance meets mandatory purchase requirements, the NCUA added. FEMA in May officially revised its PRP eligibility rules, allowing buildings that were “newly mapped into an SFHA due to a map revision on or after Oct. 1, 2008, and before Jan. 1, 2011” to be eligible for PRPs for a two-year period. Their PRP may extend until Dec. 31, 2012. Properties that will be classified as SFHAs due to map revisions that come into effect on or after Jan. 1 will be eligible for a PRP for two policy years following the effective date of the map revision, according to FEMA. Properties with PRP policies must shift onto standard policies once the two-year eligibility period has ended, FEMA said. Insurance companies will contact eligible policyholders at least 90 days before their policy expires, according to the release. For the NCUA release, use the resource link.
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