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Comments to FEMA on Proposed Rule to Modify the Standard Flood Insurance Policy Under the National Flood Insurance Program

The Federal Emergency Management Agency (FEMA) proposed a rule to modify the standard flood insurance policy under the National Flood Insurance Program by creating a new “Homeowner Flood Form,” which applies specifically to homeowners of single-family homes and owners of buildings with one-to-four units. The proposed amendments reflect sensible steps to simplify the standard flood insurance policy and to provide flexibility in coverage. We have suggested additional improvements to FEMA’s proposal and its underlying analysis.

FEMA should take additional steps to reduce flood losses through preventative measures:

  • FEMA should provide homeowners with advance payments for loss prevention measures. In order to make it easier for homeowners, particularly lower-income homeowners, to take preventative measures ahead of a flood, FEMA should provide an advance payment for covered measures. 
  • To increase uptake of resilience measures, the declarations page should explain how adaptive behaviors affect a homeowner’s premium and how climate change may increase flooding risk.

FEMA should revise its regulatory impact analysis (RIA) to conform to best practices for cost-benefit analysis:

  • FEMA should update its baseline to reflect the increased frequency and magnitude of flooding due to climate change and assess how the changing baseline affects the costs and benefits of its proposed changes to the Standard Flood Insurance Policy. 
  • FEMA should conduct a distributional analysis of the effects of the Proposed Rule.

FEMA should make minor revisions to the Homeowner Flood Form to provide policyholders with greater clarity: 

  • In order to improve uptake of the endorsements and to reduce confusion, the Homeowner Flood Form should contain cross-references to the endorsements where the terms of the endorsements conflict with the terms of the general policy.