Prohibits mortgagees from requiring mortgagors of certain residential real property to purchase flood insurance exceeding a coverage amount that exceeds the balance as of the beginning of the year for which the policy shall be in effect, or that includes coverage for contents.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5073A
SPONSOR: Hunter TITLE OF BILL:
An act to amend the real property law, in relation to prohibiting mort-
gagees from requiring mortgagors of certain real property to purchase
flood insurance exceeding certain limits
PURPOSE:
To expand the current real property law to include requirements to
produce notice between mortgagee and mortgagor on the minimal purchase
needed for compulsory flood insurance.
SUMMARY OF PROVISIONS:
Section 1 of the bill adds a new subsection (c-1) of section 283 of
the Real Property Law.
Section two provides that this act shall take effect immediately after
enactment.
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):
Makes minor adjustments including specifying "improved residential prop-
erty" and clarifies some language around timing.
JUSTIFICATION:
This bill would limit a homeowner's requirements when purchasing compul-
sory flood insurance and provide notice of the minimum insurance liabil-
ity that is required. The homeowner is not required by law to buy flood
insurance that exceeds the outstanding amounts owed to the bank or
covers content within the home. This transparency ensures homeowners are
not burdened by additional coverage by insurance companies and banks
when mandated to purchase flood insurance.
Additionally, in notifying the homeowner of minimum flood insurance
requirements, the notice would include a statement informing the home-
owner that minimum flood insurance only covers the bank's interest and
may not cover the full value of the home or the belongings inside. Home-
owners are encouraged to purchase additional insurance if they desire
greater coverage.
LEGISLATIVE HISTORY:
2019-20: A.4770-A.
2021-22: A.4424
2023: A5073
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
Effective immediately.
STATE OF NEW YORK
________________________________________________________________________
5073--A
Cal. No. 142
2023-2024 Regular Sessions
IN ASSEMBLY
March 2, 2023
___________
Introduced by M. of A. HUNTER, STECK, WALLACE, BUTTENSCHON, HAWLEY,
ZEBROWSKI, McDONALD -- read once and referred to the Committee on
Judiciary -- ordered to a third reading, amended and ordered
reprinted, retaining its place on the order of third reading
AN ACT to amend the real property law, in relation to prohibiting mort-
gagees from requiring mortgagors of certain real property to purchase
flood insurance exceeding certain limits
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The real property law is amended by adding a new section
2 283 to read as follows:
3 § 283. Limits on amount of flood insurance required by mortgagee. No
4 mortgagee shall require a mortgagor to whom the mortgagee makes,
5 increases, extends, or renews any loan or line of credit secured by
6 improved residential real property to purchase or pay for flood insur-
7 ance on such residential real property: (1) at a coverage amount that
8 exceeds the outstanding principal mortgage balance as of the beginning
9 of the year for which the policy shall be in effect; or (2) that
10 includes coverage for contents. In each instance where a mortgagee
11 requires a mortgagor to purchase or pay for flood insurance on such
12 residential real property, the mortgagee shall provide notice to the
13 mortgagor at the time the mortgagee is notified of the need to purchase
14 or pay for flood insurance that states the following in clear and
15 conspicuous print: 'Please note that the flood insurance we are requir-
16 ing you to purchase will only protect your creditor or lender's interest
17 in your property. The insurance may not be sufficient to pay for many
18 needed repairs after a flood and may not compensate you for your losses
19 in the property due to the flood. If you wish to protect your home or
20 investment, you may wish to purchase more flood insurance than the
21 amount we are requiring you to buy.'
22 § 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07415-02-4
