By Scot Kersgaard
If someone owes a million dollars on a piece of real estate, they need at least a million dollars of coverage. If they owe $10,000 on the same property, how much insurance do they need? There is clearly no one right answer.
In Massachusetts, though, a new law took effect this month that makes it clear that property owners are required only to have enough flood insurance to cover the amount they owe on the property.
The new law, pushed by MA House Speaker Robert DeLeo, is a response to higher flood insurance premiums charged by FEMA in an effort to stay afloat coupled with new flood maps that require more people to secure flood insurance. The legislation was signed into law by then-Governor Deval Patrick in 2014 but is just now taking effect and is effective at the time that property owners receive flood insurance renewal notices.
The new law also bans insurers from requiring deductibles below $5,000 or requiring that property owners insure the contents of their covered real estate.
