The U.S. Department of Housing and Urban Development (HUD) has updated its policies for wind and named storm insurance coverage required for multifamily properties financed with a Federal Housing Administration (FHA)-insured mortgage.
According to HUD, the updates are designed to provide lenders and property owners with greater flexibility in obtaining and negotiating property insurance premiums from insurance carriers. Effective immediately, FHA is increasing the maximum permissible wind or named storm deductible to the greater of $50,000 or 5% of the insurable value per location, up to a maximum amount of $475,000 per occurrence. Previous MAP Guide policy prohibited this deductible from exceeding the greater of $50,000 or one percent of the insurable value for any insured building up to a maximum amount of $250,000.
“Raising the deductible amount provides important flexibility for lenders and property owners to obtain and maintain appropriate property insurance that covers their properties in the event of catastrophic weather damage, while maintaining appropriate safeguards to ensure that properties are adequately insured,” said HUD Deputy Assistant Secretary for Multifamily Housing Ethan Handelman. “Not only is it required by FHA, but being able to secure property insurance coverage is critical to developing new and maintaining existing affordable and market-rate multifamily rental housing.”
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