I've reviewed the NFIP Guidelines on this matter, but it's still a question that has come up as a fictional scenario in training:

There is a shack on a parcel of land that will be torn down, and it's in a flood zone. We have an obligation to require insurance on the shack. We can base the amount of insurance on the Replacement Cost Value, correct? What if the RCV is only abut $300 - the average price of a small pre-fab garden shed? Would we be able to find a policy that offers that small of an amount of coverage? Because the borrower intends to remove the building anyway, can we base the amount of insurance on the cost of removal? And again - what if the cost of removal is a small amount?

Buildings with values less than $1,000, the minimum deductible, are not insurable.

Thanks, Dan!
Is that in the NFIP Guidelines someplace? I'd love to be able to provide a reference when I discuss this with staff.

Never mind .... I found it. Page 29 under "Deductible".