Is flood insurance required if the bank holds the deed?

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Is flood insurance required if the bank holds the deed?
by Mary Beth Guard, BOL Guru

Question: We recently obtained real estate that is in a special flood hazard area. The mortgage has been released, the deed is in the bank's name. Is there any reason (other than protecting ourselves in case of a flood) to maintain flood insurance on the property?

Answer: There is no regulatory or statutory requirement for you to have flood insurance in this situation, since the flood hazard requirements are triggered only when you make, extend, renew or increase a loan. Your decision is solely a safety and soundness decision.

The original version appeared in the June 2002 edition of the Oklahoma Bankers Association Compliance Informer.

First published on BankersOnline.com 11/25/02

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