Q: If there is a guest cottage or a pool house on a property included in the appraised value, how do we determine the amount of coverage to request for the separate policies required on these structures?
A: There is no exact method, total required flood insurance coverage can be allocated among the secured buildings in varying amounts. A best practice may be to make a reasonable determination of how the value is distributed among the multiple structures, whether the appraisal gives this guidance or the insurance agent can advise- then distribute coverage accordingly.
– This Q&A was included in the materials from the FDIC New York Region Regulatory Teleconference: “Flood Insurance – Flood Insurance Compliance and an Examiner’s Perspective” which took place on December 3, 2012. These materials may be found here: https://www.fdic.gov/news/conferences/NY/2012-12-03.html