We have a $250,000 farmstead loan that falls in a flood zone. The loan contains:

Non-owner occupied home appraised at $149,000 replacement cost (depreciated value (Actual cash value) is $60,000)

Dairy Barn valued at $34,000 replacement cost (depreciated value (ACV) is $6,700)

Open-End Shed valued at $29,500 RC (Depreciated value (ACV) is $3,000)

The insurance policy is for building coverage of $80,000.

1st Question: Do we need seperate policies on all of the structures(house, barn, shed)?

2nd Question: Are we right to use the ACV cost approach instead of replacement cost because it is non-owner occupied?

Page 38 of the Mandatory Purchase Guidelines:

. . . Each building securing a loan must be covered by a separate policy.


Loss payment for RCV and ACV is discussed on page 28.