As many of you know, the Amish do not believe in insurance. In the case of fire insurance, the bank can accept a letter from the Amish community leaders that the community will rebuild the home if it is destroyed by fire.

What about flood insurance? I don't recall reading anything that gives the bank the leeway to accept such a letter in lieu of requiring insurance. Is there something in the law that permits such an exemption?

I know of no exemption.

I've never seen any exception. But you did just teach me something about fire insurance though. Do you have a cite for that?

It is not a regulation. The Amish will stand behind a loan. This is as good as gold for bankers.

Amish people are probably too smart to build a home in a flood plain. Is this a real situation, or a "rainy day" question?

Mennonites have credit unions. Amish are more hard core. They do not have computers or even electricity.

No rainy day question here - sorry to say this is a real situation.

Living in Pennsylvania and having worked in banking for many years in PA, we accepted a letter from the Amish community "elders" stating that if a house or barn, etc. burned down or was otherwise destroyed, the community would rebuild it. That is their practice and they do rebuild for affected members of the community. Never a question. There is no equivalent for flood isurance that I have ever come across-we only did this for hazard insurance.

The Susquehanna goes through the Lancaster area but that doesn't mean there are any Amish farms in the flood plain. If I can track down some of my former CoreStates (now Wachovia) co-workers out that way, I can ask what they do for flood.

You could always buy the insurance at the bank's expense and raise the price on the loan.

You could also always ask FEMA's advice. This must have come up before.

Perhaps the Amish community is considered a non-participating community and therefore flood insurance is not avaialable?

I've sent this question up through FEMA a couple of times in regard to a particular religious group. The group writes a general cooperative policy that includes flood coverage. After several requests for advice, with FEMA deferring to our regulator and our regulator deferring to FEMA, got advised that there just was not an exception. To substitute any coverage for the federal policy, it has to be comparable. This is usually an issue on cancellation, though we also had questions regarding the church group not being a licensed provider(they are exempt) and the "policy" being described as not being an insurance policy in the program description. Local examiners had not run into this before either. (Knowing that the bank down the street accepted the customer without further insurance while we were instructed not to was noted by both of us.) By the way, we did have the loan for one year with a force placed federal policy. The customer found they could do better elsewhere. As noted above, it was unusual to first, be making a loan to a member, and second, to have buildings in a flood zone.