Federal Register #2026-07618

USDA Final Rule: Updated Insurance Requirements for Multi-Family Housing Programs

This final rule from the USDA Rural Housing Service updates insurance requirements for Multi-Family Housing (MFH) Direct Loan and Grant programs: - Government Buyer: - U.S. Department of Agriculture (USDA), Rural Housing Service (RHS), Multi-Family Housing Asset Management Division - OEMs and Vendors: - No specific OEMs or vendors are named, as this is a regulatory update, not a procurement for products or services - Products/Services Requested: - Hazard Insurance: Covers loss or damage from fire, smoke, lightning, windstorms, hail, explosion, riot, civil commotion, aircraft, and vehicles - Builders Risk Insurance: Insures 100% of estimated project cost during construction or rehabilitation - Business Income Loss Insurance: Covers loss of rental income for up to 12 months due to property loss - Flood Insurance: Minimum coverage of 80% of insurable replacement value or maximum allowed under the National Flood Insurance Act - Workers Compensation Insurance: Required for all permanent and part-time staff assigned to MFH projects - Fidelity Coverage: At least 25% of operational cash sources or $50,000 minimum, with deductible not exceeding $15,000 per occurrence - Unique or Notable Requirements: - Deductible limits and coverage amounts are now aligned with affordable housing industry standards - Mandatory notice periods for policy changes - Clarified handling of insurance settlements and fidelity coverage - Aims to reduce insurance premiums and improve financial resilience for rural affordable housing projects - Applies to MFH programs including Section 515 Rural Rental Housing loans, Section 514 and 516 Farm Labor Housing loans and grants, and Section 521 Rental Assistance

Description

The Rural Housing Service (RHS), a Rural Development agency of the USDA, is implementing changes to insurance requirements for the Multi-Family Housing Direct Loan and Grant programs. This final rule aligns insurance coverage types, amounts, and deductibles with affordable housing industry standards to simplify requirements and improve customer experience. The rule includes updated deductible limits based on coverage amounts and clarifies insurance policy requirements. It is effective May 20, 2026.

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