We only require the minimum level of insurance required by flood regulations (the lesser of....). We are considering having the customer either sign, or simply providing it to them, a notice indicating that if they insure for less than the full value of their property, that their equity may not be protected.

Thoughts on this? Is anyone else doing this? As a policy, what do you require borrowers to provide in coverage?

Thanks.

I understand your concern. This is really the insurance agent's job/responsibility. Most (if not all) of our clients only require the minimum, like you. I've also never seen anyone do what you are considering, but maybe some do.

That's the way I'm leaning. Maybe I'll put it in an addendum somewhere. Or maybe I'll nix the whole thing.

Thanks for the response.

Or you could think about suggesting that the customer consult with his insurance agent on appropriate coverage limits, subject to the minimums you require.

I think I was looking to the day when we (banks) end up getting criticized for not educating the customers better. Just thinking the next time a Sandy rolls around and people lose their equity.

Thank you gentlemen.