A closer look at private flood insurance – The compliance aid provision

I know everyone groans when the issue of flood insurance comes up – but here is a quick and easy summary of an important update.

As of July 1, 2019, credit unions are now required to accept certain private flood insurance policies that meet the requirements established with the flood rules. And, while July 1st has come and gone, there could still be some confusion from the rule – specifically with the compliance aid provision.

In general, the new rule requires credit unions to accept private flood insurance as defined in the Biggert-Waters Act through four main provisions – among them – a streamlined compliance aid provision. Under the final rule, a credit union may find, without further review, that a policy meets the definition of private flood insurance if the policy (or an endorsement to the policy) states:

“This policy meets the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation.”

 

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