Windstorm Insurance
Requirements
You must ensure the:
- PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). has separate windstorm insurance if the Special Causes of Loss Form excludes any type of wind-related Catastrophic EventCatastrophic EventNatural or man-made hazard resulting in an event of substantial extent causing significant physical damage or destruction, loss of life, or drastic change to the natural environment, such as earthquake, flood, terrorist attack, or windstorm. ;
- coverage equals at least 100% of the Insurable ValueInsurable ValueFor any Property, the estimate of the maximum dollar amount needed to replace, repair, or reproduce the Property, but excluding any land value. ;
- valuation does not rely solely on Probable Maximum Loss (PML) calculations; and
- deductible does not exceed the greatest of
- 10% of the Insurable ValueInsurable ValueFor any Property, the estimate of the maximum dollar amount needed to replace, repair, or reproduce the Property, but excluding any land value. ,
- the applicable maximum amount per Part II, Chapter 5: Property and Liability Insurance, Section 501.02A: Minimum Coverage Amounts, and
- for business income insurance, the greater of
- the maximum deductible for the property insurance policy, or
- an amount equal to 15 days of business income or equivalent.
Guidance
If a business income insurance deductible is stated as a total dollar amount, you should:
- calculate the deductible on a per day basis; and
- ensure the aggregate per day amount does not exceed 15 days of income.
For example:
If the business income requirement is $1,000,000, and the policy indicates a business income deductible of $100,000, and the maximum deductible allowed for the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is the greater of (a) $25,000, or (b) an amount equal to 15 days of income, the policy is not compliant since:
- $1,000,000 divided by 365 equals $2,740 per day;
- $2,740 multiplied by 15 days equals $41,095; and
- $100,000 is higher than both the allowed $25,000 PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). deductible and the total 15-day calculation.
If catastrophic windstorm coverage is unavailable in the market, Fannie Mae will consider approving 1 of the following options:
- a state insurance plan; or
- state-managed insurance pool for
- windstorm, or
- beach erosion.
Catastrophic windstorm coverage:
- includes hurricane and tropical storm damage; and
- may be categorized or defined in the insurance policy using terms such as
- named storm, or
- tier one, etc.
If windstorm coverage is unavailable or is not economically feasible, you may submit the following for Pre-ReviewPre-ReviewRequirement that you obtain Fannie Mae’s approval before you Rate Lock a Mortgage Loan. :
- a recommendation for a reasonable coverage amount, given the exposure and based on your knowledge of the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). and BorrowerBorrowerPerson who is the obligor per the Note. ;
- all compelling reasons for approving the request;
- the Property’sProperty’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). precise location;
- blanket analysis per Part II, Chapter 5: Property and Liability Insurance, Section 501.01B: Blanket and Other Policies Covering Multiple Properties;
- construction analysis; and
- any financial mitigants available.