FEMA Insurance Requirements - A FEMA memo issued June 4 changes the insurance requirements that local governments and nonprofits must meet to be eligible for federal assistance, leaving local governments potentially responsible for millions of dollars in deductibles. FEMA Fact Sheet 9580.3, available at http://www.fema.gov/government/grant/pa/9580_3.shtm, states that FEMA won’t pay the same type deductible it has paid in the past. According to the Fact Sheet, “Disaster assistance provided by FEMA is intended to supplement financial assistance from other sources. Disaster assistance will not be provided for damage or losses covered by insurance.†This change in the insurance requirement sets higher requirements for insurance coverage and leaves local governments responsible for paying their own insurance deductibles.
The applicant: “must purchase and maintain insurance coverage on facilities – buildings, equipment, contents, and vehicles - for the hazard that caused the damage in order to receive PA funding. Such coverage must, at a minimum, be in the amount of the eligible project costs. FEMA will not provide assistance for that facility in future disasters if the requirement to purchase and maintain insurance is not met.†According to FEMA, self-insurance is an option only for States. “Local and Indian Tribal governments and eligible private non-profit organizations may not satisfy the insurance purchase requirement with self-insurance.â€