‌Subpart I: Public Assistance Insurance Requirements

Summary: Subpart I implements the "Obtain and Maintain" rule, the most significant "Financial Hook" in the FEMA program. It mandates that any facility receiving federal funds for permanent repair must be insured against that same peril in the future. This requirement is a "Covenant" that follows the property, meaning the municipality is legally bound to pay insurance premiums forever to keep its FEMA eligibility. It also includes the "Insurance Reduction" rule, where FEMA will subtract any "Actual or Anticipated" insurance proceeds from the grant award. For a CFO, this subpart is a "Long-Term Liability" that must be managed through "Risk Financing" and "Captive Insurance" structures. It ensures that the federal government is not "Self-Insuring" local infrastructure for free. Subpart I is the "Sustainability Clause" that protects the "Fiscal Resiliency" of the national disaster fund.

● §206.250 General: You must recognize that FEMA is "Secondary" to your insurance policy. This is essential for "Audit Preparedness"—you must show your "Insurance Claim" before FEMA will pay theirs.

● §206.251 Definitions: You must understand what FEMA considers "Available and Affordable" insurance. This is essential for "Appealing" a requirement if the insurance market "Fails" for a specific type of infrastructure.

● §206.252 Insurance Requirements for Public Assistance: You must purchase insurance equal to the "Eligible Damage" amount. This is essential because if you "Fail to Insure," you will be "Barred" from all future FEMA aid for that facility.

● §206.253 Self-Insurance: You must get "FEMA Approval" if you want to use a

"Self-Insurance Fund" to meet the requirement. This is essential for "Large Cities" that don't use commercial insurance to prove they have the "Cash on Hand" to rebuild.

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