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:

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

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

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

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

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

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

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

     (2) That includes coverage for contents; or

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

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

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

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

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

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

WE ARE REQUIRING YOU TO PURCHASE WILL ONLY PROTECT YOUR

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

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

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

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

PURCHASE MORE FLOOD INSURANCE THAN THE AMOUNT WE ARE REQUIRING

YOU TO BUY."

     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

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

     This act would take effect upon passage.

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LC003872

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