Environmental Review FAQ
Q

Are there any exceptions to the flood insurance purchase requirements?

Date Published: May 2014

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A

There are four exceptions: (a) formula grants made to States; (b) State-owned property; (c) small loans ($5,000 or less); and (d) assisted leasing that does not involve repairs, improvements, and acquisition. Each category of exception is explained as follows:

  1. HUD State-administered assistance such as Community Development Block Grants (CDBG), Emergency Shelter Grants (ESG), and HOME Investment Partnership Grants are considered "formula grants made to States." By law, "formula grants made to States" and along with "general and special revenue sharing" are exempt from the flood insurance purchase requirements by Section 3(a)(3) of the Act. For HUD policy, see 24 CFR 58.6(a)(3).
  2. Flood insurance purchase is not required for any State-owned property that is covered under an adequate State policy of self-insurance satisfactory to FEMA as published in a list of States to which Section 102(c)(1) of the Act applies. Local governments and other organizations are not authorized by this Act to be self-insurers under the National Flood Insurance Program. If the State agency has authority under State regulations, it may require the property owner to purchase and maintain flood insurance to protect the federal investment benefiting HUD assisted SFHA-property. 
  3. Flood insurance is not required for loans having an original outstanding principal balance of $5,000 (or less) and repayment term of 1 year (or less) as authorized by Section 102(c)(2) of the Act. 
  4. Flood insurance is not required for HUD assisted leasing of a building or structure provided that the assistance is not used for repairs, improvements, and acquisition.

Tags: Environmental Review Flood Insurance

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FAQ ID:

1510