We have a rural residential property that has a home and detatched 2-stall garage that is in a flood zone. Our examiners commented on this property because we only have one flood insurance policy. The coverage on the flood insurance policy is adequate for the loan amount and also based off of the appraisal amount for the property, less the value of the land.

Why does FEMA require separate flood policies on each structure?

As I looked into this further the instructions for the Flood Determination state that we either need a determination for each building or an attachment to the determination with a list identifying each additional structure and notes in the comment section on the determination documenting those.

What happens if you only have one determination with multiple buildings? Is the property inelligible for insurance? Is the Lender the only one responsible for ordering the determination properly? Or is the Flood Determination Agency responsible for completeing the determinations in compliance with the regulation?

Help me understand what seems to be silly red-tape, in my opinion.

You need to ask FEMA. My guess primarily for the purpose of obtaining additional premiums to fund the NFIP.



Quite simply - it's the law. Yes, the flood requirements are a law.



The lender is 100% responsible for the accuracy of the SFHDF, including the determination whether the property is in or out of a SFHA.




If the multiple buildings are on the same property (parcel) then one determination is sufficient. If the multiple buildings are on separate parcels then they are on adjacent properties and you must have a SFHDF for each adjacent property.

The failure to obtain a proper SFHDF would not make the property ineligible for insurance. You would just have to correct your error and then obtain the insurance.

Believe me I did know it was "Law"; however, having a flood insurance policy on a garage and another one on a home at the same address doesn't seem like the American way....

I never thought about the concept of more policies being more funding, but that probably is it.

Now to go tell our borrower......that it is law!

Thanks for your comments.

I don't have the link and I'm in the middle of file reviews...but you may want to check..there is an allowance for detached garages..providing it is used only as a garage...no work shops etc....I believe it has to be within a certain distance from the residence and if I remember correctly there is like a 10% coverage allowance on the garage.

If the examiners have enough time to look at junk like this, then we have too many examiners (being paid for with this additional funding)...and here I thought the flood zone mismatch issue was a bit "over the top"...sheesh!

See page 3 "Appurtenant Structures" for garages...
http://www.fema.gov/pdf/nfip/manual200705/03gr.pdf