The Federal Emergency Management Agency has proposed increasing the maximum limits of flood insurance coverage for NFIP-covered residential and commercial properties.

The proposed rule, which was published in the Nov. 15 Federal Register, would also amend National Flood Insurance Program regulations to increase the waiting period before flood insurance coverage becomes effective under the standard flood insurance policy.

The rules comply with requirements outlined in the National Flood Insurance Reform Act passed before Congress recessed. FEMA is accepting comments on the proposed rule until Dec. 30.

Under the FEMA proposal, the maximum coverage for residential properties would increase to $250,000. Coverage for all other structures would rise to $500,000. The rule would also raise the new maximum limits for all residential structure contents to $100,000 and nonresidential structure coverage would increase to $500,000.

Coverage for residential condominium buildings would also go up, with the proposed maximum of $250,000 coverage times the number of units in the building. That coverage, however, is not to exceed the buildings replacement cost.

The rule would also establish a 30-day waiting period before which flood insurance coverage become effective. The new rule would supplant the existing five-day waiting period, with two exceptions:

When the initial purchase of flood insurance is in connection with the making, increasing, extension or renewal of a loan. In those instances, coverage becomes effective at loan closing provided the flood insurance policy is applied for and the premium payment is made at or before closing; and When the initial purchase of flood insurance is made during the one-year period following the issuance of a revised flood map for a community. In those instances, coverage becomes effective after midnight on the first calendar day after application and the payment of the premium.

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