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Effective July 1, credit unions must accept private flood insurance policies for applicable loans if they meet the definition outlined in the Biggert-Waters Flood Insurance Reform Act of 2012.
When flood insurance is a requirement for a loan, credit unions must accept policies that are equal to or better than coverage under the Standard Flood Insurance Policy. Policies also should be offered by a licensed company who is recognized as a surplus lines insurer in the state.
Credit unions may, at their discretion, accept policies that do not meet these requirements if a host of other conditions are met. Mutual Aid Society Plans must be approved by the National Credit Union Administration (NCUA), but may be accepted.
In May, the NCUA published a letter to credit unions providing details on how to determine if insurance policies meet the required definitions, as well as guidance on how to adopt the new requirements. If your credit union has questions or concerns regarding the new rules, please contact Ellen Parent, the League’s Regulatory & Legislative Advocacy Coordinator, at eparent@mainecul.org.