The Federal Emergency Management Agency (FEMA) approved a final rule revising regulations to allow National Flood Insurance Program (NFIP) policyholders the option of paying their annual premium in monthly installments.
Prior to the new rule, FEMA required policyholders to pay their annual premium in full at the time of application. The new rule revises two sections in FEMA’s regulations requiring both residential and commercial policyholders to pay the full amount due on a policy before it would issue or renew the policy.
There will be no additional financial cost to policyholders to make the monthly electronic payments, the agency stated.
The changes will bring FEMA’s regulations into compliance with statutory mandates under the Biggert-Waters Flood Insurance Reform Act and the Homeowner Flood Insurance Affordability Act. FEMA stated the rule will also reduce barriers to purchasing flood insurance, noting some consumers lack the financial ability to pay the entire premium at once.
“In administering the NFIP, FEMA provides information to help communities and individuals better understand their flood risk. However, flood risk knowledge by itself is not enough if households cannot act to protect themselves,” FEMA’s post on the rule in the Federal Register stated. “Providing an option for monthly installments will expand access to flood insurance to meet the evolving needs of the nation. The option to pay in installments may also increase policyholders’ budgetary flexibility by alleviating cash flow pressure, as they could use the deferred payment to address other monthly needs.”