There are 2 properties - 1 is located in a flood area, the other is not
Total Loans Outstanding = $174,202.97 both properties secure the loan including the contents of the Commercial building that is located in a flood zone according to the UCC filed.

I looked for an appraisal in the file but only found an in house (which I usually don't use the value on that because most of the time it only has the market value on it) so I found the Hazard Insurance which had coverage of $158,000 plus $61,800 for contents on it which is for the building that is in a flood zone. I found no Hazard Insurance in file for the other property.

Since I couldn't find anything else my determination for the amount of flood insurance needed is $174,202.97 which is the total amount of the loans.

I have told my folks in the past to use the RCV/ACV off an appraisal first if available, if not available then use the Hazard Ins, if that's not available then use the Tax Assessors Valuation as a last resort to determine the value of the property.

The total amount of flood insurance I found in file was $93,500 and none was allocated to contents. How much flood insurance do you calculate that is needed on this property?

First, forget about the property not in the SFHA. It's value doesn't come into play in determining the proper amount of insurance. Second, I agree with you that $174,202.97 is the necessary minimum. Here's how I arrived at that:

Loan Amount = 174,202.97
Insurable Value = 158,000 = 61,800 ??? If that's the correct amount, then 219,800
Max = 500,000 (building) and 500,000 (contents) assuming the property is participating in the regular program.

Lesser of 3 is the loan amount. Thus, you need $174,202 minimum.

The borrower need to allocate some to the building and some to the contents (up to them to decide how much to each).

The property not in the flood zone is irrelevant. It appears the insurable value, based on the hazard insurance, is higher than the loan amount, so as long as you split the loan amount between the building and the contents, the you will always be safe from a compliance standpoint. If you think the hazard is high and the actual cash value for building and contents is less than $174,202.97, then I would press the flood insurer to give me the insurable value, but I wouldn't go lower than the loan amount without something to support the lower insurable value.

My response was slow to post, so in other words ditto what David said.

Blue: But we both came up with the same answer - so we must be right!

Great! Thanks for the replies.

What does your company flood policy says as it relates to insurable value?

I do agree with gentlemen figures above.

Need a little further clarification please.... I looked back further in the file and found a certified appraisal dated 10-15-2013 with an ACV value listed $91,400 and in the Q & A's #9 What is insurable value? In the answer it doesn't specify that the appraisal or whatever you use must be current if you are doing a review for current flood insurance so is it your opinion that we can use the original certified appraisal with the ACV as the valuation for this property?

Since it's a non-dwelling, using the ACV is correct. $91,400 may be the correct insurable value for the building, but what about the content value? You'll still need to add that to the ACV to determine the total insurable value needed. So let's plug that in to the "lesser of 3" calculation:

Loan Amount = 174,202.97
Insurable Value = 91,400 + 61,800 = 153,200
Max = 500,000 (building) and 500,000 (contents) assuming the property is participating in the regular program.

Therefore, you would need a minimum of $153,200.

Here's your next steps:
1. Determine the insurable value of the building and contents. This is hard. You can use hazard insurance, and appraisal (not market value), etc. I would contact the insurance agent and ask how they arrived at the insurable value too. As my math teacher always said "show your work".
2. Calculate the lesser of 3 (as I have demonstrated).
3. If the needed amount is greater than what you have, notify the customer and begin force placement procedures.

Again, thanks for the help!