2014 -- S 2261

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LC003872

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO INSURANCE -- FLOOD INSURANCE

     

     Introduced By: Senators Sosnowski, DiPalma, Sheehan, and Cool Rumsey

     Date Introduced: February 04, 2014

     Referred To: Senate Commerce

     It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 27-5 of the General Laws entitled "Fire Insurance Policies and

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Reserves" is hereby amended by adding thereto the following section:

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     27-5-3.9. Flood insurance. – No lending institution, as defined in § 19-9-1, doing

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business in this state, its affiliates or subsidiaries, or a bank holding company, as defined in 12

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U.S.C. § 1841, its affiliates or subsidiaries, shall require in a mortgage, note or otherwise, a

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purchaser or owner of residential property to purchase or pay for flood insurance on the property:

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     (1) At a coverage amount that exceeds the outstanding mortgage thereon;

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     (2) That includes coverage for contents; or

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     (3) That includes a deductible less than five thousand dollars ($5,000).

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     In each instance where a creditor requires in a mortgage, note, or otherwise, a purchaser

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or owner of a residential property to purchase or pay for flood insurance on said property at the

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time the purchaser or owner of the residential property at the time the purchaser or owner of the

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residential property is notified of the need to purchase or pay for flood insurance that states the

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following in clear and conspicuous print: "PLEASE NOTE THAT THE FLOOD INSURANCE

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WE ARE REQUIRING YOU TO PURCHASE WILL ONLY PROTECT YOUR

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CREDITOR'S/LENDER'S INTEREST IN YOUR PROPERTY. IT MAY NOT BE SUFFICIENT

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TO PAY FOR MANY NEEDED REPAIRS AFTER A FLOOD AND MAY NOT

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COMPENSATE YOU FOR YOUR LOSSES IN THE PROPERTY DUE TO THE FLOOD. IF

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YOU WISH TO PROTECT YOUR HOME OR INVESTMENT, YOU MAY WISH TO

 

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PURCHASE MORE FLOOD INSURANCE THAN THE AMOUNT WE ARE REQUIRING

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YOU TO BUY."

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- FLOOD INSURANCE

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     This act would set limits on the amount of flood insurance a financial institution would

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require an owner to acquire, and would require notice regarding the extent of the coverage.

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     This act would take effect upon passage.

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LC003872

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