We have a complex commercial loan taking several different properties as collateral; only a few are in a flood zone. Is the flood insurance calculated disregarding the properties that are not in a flood zone? Let's say the properties requiring insurance are eligible for a combined amount of coverage equal to or exceeding the loan balance - would the flood coverage have to equal the balance, even though there are numerous other properties as collateral?

I suppose the answer is yes, flood insurance would have to cover the entire balance, but I'm struggling with this concept; if the properties were financed separately the required coverage would be much less.

The lesser of the three:

1. The loan amount.
2. The insurable value of all structures in a SFHA.
3. The maximum insurance available under the NFIP on those structures.

It is about protecting the federal government from uninsured flood losses and has nothing to do with banking or typical logic when it comes to collateral.

I need to throw logic out the window when it comes to flood. Thank you Randy!