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.