If the Bank determines that the flood insurance coverage is deficient, what is the amount of insurance to force place -the required amount of coverage or the difference between the amount of insurance the borrower has and the required amount?

The FDIC Compliance Exam Manual says the amount that must be force placed for flood insurance is the difference between the present amount of coverage and the required amount. However, I thought there could only be one flood insurance policy per building which would require the Bank to force place for the entire required amount. What am I missing?

One NFIP policy only. If you are forcing a private policy, then you need to get with your provider to figure out how to do this. An NFIP for $100,000 and a private policy for $50,000 - still only equals $100,000 in coverage as insurance is not cumulative.

So the FDIC's required amount to force place would result in inadequate coverage?

The FDIC said you have to cover the difference, they did not go into what you have to do to accomplish that process.

if the borrower has deficient flood coverage, you would simply force place what is called a "supplemental" flood policy. Since force placed flood is written through private insurers outside the NFIP, you would have two valid policies: the borrowers deficient policy from the NFIP and the one through your private FP flood insurer with the aggregate amount being the required amt of flood insurance.