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#1840935 - 08/08/13 09:45 PM Same property with two loans to one borrower
hayat Offline
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hayat
Joined: Aug 2013
Posts: 14
We have two $4 million loans to the same borrower that is collateralized by the same commercial property. Does each property need its own flood policy? Does each loan max at $500,000?

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Flood Compliance
#1840944 - 08/08/13 10:05 PM Re: Same property with two loans to one borrower hayat
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,269
Galveston, TX
One policy per building is all that is available through NFIP.

With two $4 million loans it sounds like you have a $7.5 million exposure. I sure hope your borrowers (not to mention your capital position) is good for it.

Most banks start looking for private insurance when the exposure gets this big.
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#1840956 - 08/08/13 10:19 PM Re: Same property with two loans to one borrower rlcarey
hayat Offline
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hayat
Joined: Aug 2013
Posts: 14
Thank you!

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#1840959 - 08/08/13 10:28 PM Re: Same property with two loans to one borrower rlcarey
hayat Offline
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hayat
Joined: Aug 2013
Posts: 14
What if the collateral has multiple structures. Do they all need their own policy? And is the max at $500,000 as well?
Last edited by hayat; 08/08/13 10:29 PM.
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#1840963 - 08/08/13 10:56 PM Re: Same property with two loans to one borrower hayat
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,269
Galveston, TX
If they are non-residential structures, then each separate building would need a separate policy up to $500,000 or the individual insurable values.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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