If I have a FEMA Flood policy with a coverage limit on the building of $20,000 and content coverage of $100,000 with both having deductible of $50,000 each, have I met the flood insurance requirements? Or do I need a deductible on the building below the $20,000?

The NFIP will issue a flood policy with a deductible greater than the policy? I have never seen one. It makes the policy worthless and I for one would not accept it..

I checked with FEMA and they would write such a policy with a deductible above the value of the building if that is the way the Agent wrote the policy.

Interesting. Just curious, how much of a premium are they paying for the privilege of having no coverage?

Then you also have to deal with this.

17. Can a lender allow the borrower to use the maximum deductible to reduce the cost of flood insurance?

Answer: Yes. However, it is not a sound business practice for a lender to allow the borrower to use the maximum deductible amount in every situation. A lender should determine the reasonableness of the deductible on a case-by-case basis, taking into account the risk that such a deductible would pose to the borrower and lender. A lender may not allow the borrower to use a deductible amount equal to the insurable value of the property to avoid the mandatory purchase requirement for flood insurance.

Is $50,000 still the maximum non-residential deductible?

Yes

Where can I find an official list of the maximum deductibles allowed per property type? I searched FEMA's website and googled and cannot find it. Thank you.

The current available deductible options can be found in the NFIP Manual, Appendix J:Rate Tables.

Thank you.

Maximum for 1-4 is $10,000?

If you attended the June 18, 2019 Interagency Flood Insurance Update on Private Flood Insurance Rule Outlook Live Webinar at about the 11 minute mark there was an example given stating you could have a deductible above the $50,000 for a commercial property that had a policy for more than $500,000, that the first $50,000 of the deducible would apply to the first $500,000 of the policy? Is anyone allowing that today and if so how are you documenting it?

You misheard them. If the limit of coverage is greater than the maximum amount available through the NFIP, only the portion of limit that is available through the NFIP is required to carry an NFIP-equivalent deductible. This is laid out with example in the final rule commentary, too (https://www.occ.gov/news-issuances/news-releases/2019/nr-ia-2019-15a.pdf, pages 16 & 17).

Ex. A commercial flood policy with a $1,000,000 limit of coverage only needs an NFIP-equivalent deductible (i.e. not more than $50,000) for the first $500,000 of that limit. A second, larger deductible may exist/apply to coverage above $500,000.01 without causing the policy to fail the overall Private Flood Insurance definition test.

FWIW, I've never seen a private flood policy with stacked flood deductibles... Think it's just their way of telling commercial lenders that the $250m/$500m deductibles seen on large commercial policies aren't acceptable for PFI test and fall under Discretionary Acceptance if a lender wishes to accept.

J Van Horn: I think that's what llventhedream said:
you could have a deductible above the $50,000 for a commercial property that had a policy for more than $500,000, that the first $50,000 of the deducible would apply to the first $500,000

I have not seen a stacked deductible either. I envision two things:
1. You can write a private policy any way you want. Possibly, the policy has stacked deductibles of $50k on the first $500,000 and a higher deductible for the coverage about 500k.
2. You purchase one policy (NFIP or private) that covers the first $500k and has a max 50k deductible. You purchase a 2nd policy (private) that only covers loss above the first policy. This secondary policy could have any deductible.

Again, I haven't seen either.

Hmmm... not how I read it last week and, still, not how I read it this morning. Liventhedream suggests he heard the Agencies say a single deductible above $50,000 might have a component where the first $50,000 of that deductible would/could apply to the first $500,000 in coverage. Answer: No, that's not what was said in the presentation. The adjusters spoke about the possibility of a policy carrying two separate deductibles.

I think the nuance is important. Lenders shouldn't waste energy looking for a clause that might allocate these large deductibles and, more importantly, should never assume this is how a single large deductible works.

re 1 - yes, it *could* happen, but the product isn't out there today, And when we consider why policies are written with high deductibles, we can imagine why the market wouldn't looking to drop the deductible for the first $500,000 in coverage.

Deductibles are meant to control claim frequency and expense from the bottom-up (customer self-insures first, company steps in after threshold met), not the top-down and certainly not to jump-in somewhere in the middle...

re 2 - yes, this happens all the time; this practice is common enough for large commercial properties. But this is also a scenario with separate policies where each policy only imposes one deductible.