BILL NUMBER: S8066
SPONSOR: SKOUFIS
 
TITLE OF BILL:
An act to amend the real property law, in relation to limits on amount
of flood insurance required by a mortgagee
 
PURPOSE:
This bill clarifies minimum flood insurance standards as established by
chapter 64 of the laws of 2025. Minimum flood insurance cannot exceed
the mortgagor's interest in a collateral property, including for the
full line of credit on that property, regardless of how much available
credit has been drawn down.
 
SUMMARY OF PROVISIONS:
Section 1: Amends section 283 of the real property law, to limit how
much flood insurance a mortgage lender (mortgagee) can require from a
borrower (mortgagor) on improved residential property. The required
coverage cannot exceed the lesser of the replacement cost of the proper-
ty improvements or the outstanding principal mortgage balance at the
start of the policy year, and it cannot mandate coverage for contents.
Section 2: Sets effective date.
 
JUSTIFICATION:
Allowing flexibility in flood insurance requirements gives homeowners
more choice when securing financing. While fully insuring a home and its
contents is ideal, it may not be financially feasible for every homeown-
er-especially when the property's flood risk is relatively low, despite
mandatory insurance requirements. This legislation helps by allowing
homeowners to purchase only the coverage necessary to secure the loan
collateral. However, there was uncertainty regarding whether lenders
could require coverage for the full line of credit on a home equity
loan. This law clarifies that such a requirement is permissible, regard-
less of how much credit has been drawn, thereby ensuring continued
access to credit for borrowers subject to mandatory flood insurance.
 
LEGISLATIVE HISTORY:
New Bill.
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect on the same date and in the same manner as
section 1 of chapter 64 of the laws of. 2025, takes effect.

Statutes affected:
S8066: 283 real property law