Apr 18, 2024
WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) has announced updates to its policies for wind and named storm insurance coverage required for multifamily properties financed with an FHA-insured mortgage. This move comes as part of HUD’s efforts to tackle the escalating insurance costs faced by property owners due to the increasing frequency and severity of storms attributed to climate change.
HUD Acting Secretary Adrianne Todman emphasized the importance of these revisions, stating, "The increased frequency and intensity of extreme weather events have contributed to this steep rise in insurance costs, which is especially difficult for property owners trying to maintain affordable rents. We are working hard to bring down housing costs and increase the resilience of communities."
Julia Gordon, Assistant Secretary for Housing and Federal Housing Commissioner, highlighted that the updated policy aligns FHA with industry practices and will support the provision of much-needed affordable rental housing nationwide. Ethan Handelman, Deputy Assistant Secretary for Multifamily Housing, pointed out that the increased deductible amount offers flexibility for lenders and property owners to secure adequate insurance coverage while safeguarding their financial stability.
Effective immediately, FHA has raised the maximum permissible wind or named storm deductible to enhance property insurance coverage for multifamily properties. Previously capped at $250,000, the deductible now stands at the greater of $50,000 or five percent of the insurable value per location, up to a maximum amount of $475,000 per occurrence.
These adjustments aim to provide property owners with greater flexibility in obtaining and negotiating insurance premiums, ensuring that properties are adequately covered in the face of catastrophic weather events. Such initiatives are crucial in the ongoing efforts to address rising insurance costs and enhance the resilience of communities nationwide.
The announcement by HUD signifies a proactive approach in adapting to the changing landscape of climate-related challenges and underlines the commitment to supporting affordable and market-rate multifamily rental housing across the country.
