Int Q&A – Amount 5 – How much insurance is required on a building located in an SFHA in a participating community?

Compliance > Lending > Flood > FAQs
Q:  Amount 5 – How much insurance is required on a building located in an SFHA in a participating community?
 
A:   The amount of insurance required by the Act and Regulation is the lesser of:
 
• The outstanding principal balance of the loan(s); or
• The maximum amount of insurance available under the NFIP, which is the lesser of:

o The maximum limit available for the type of structure; or
o The “insurable value” of the structure.

Example: (Calculating insurance required on a non-residential building):
Loan security includes one equipment shed located in an SFHA in a participating community under the Regular Program.
 
• Outstanding loan principal balance is $300,000.
• Maximum amount of insurance available under the NFIP:

o Maximum limit available for type of structure is $500,000 per building (nonresidential building).
o Insurable value of the equipment shed is $30,000.
 
The minimum amount of insurance required by the Regulation for the equipment shed is $30,000.
 
 
ADDITIONAL INFORMATION:
This Q&A was included in the Interagency Questions and Answers Regarding Flood Insurance, which were issued on 05/11/2022.  They were published in the Federal Register on 05/31/2022 and may be found here:  https://www.federalregister.gov/documents/2022/05/31/2022-10414/loans-in-areas-having-special-flood-hazards-interagency-questions-and-answers-regarding-flood
 

Add Feedback