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#2206599 - 02/20/19 07:30 PM Flood Insurance on Contents
mdog76 Offline
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Joined: Jan 2007
Posts: 645
We are making a loan for a customer who specializes in demolitions. They are purchasing a building to serve as their office and the property is in a flood zone. Question is about the tools and equipment that is also on the property. These "contents" are able to be moved from jobsite to jobsite and are not on the flood property 24/7. Does that matter in this case or are the contents still covered as if they are on the property all the time.

Thank you.

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Flood Compliance
#2206603 - 02/20/19 07:43 PM Re: Flood Insurance on Contents mdog76
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,352
Galveston, TX
You are taking these items as collateral also?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2206682 - 02/21/19 02:45 PM Re: Flood Insurance on Contents mdog76
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
If you are taking them as collateral, check with an insurance agent to determine if they are insurable. This is a tricky area and difficult for us to tell you what contents can and cannot be insured.
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David Dickinson
http://www.bankerscompliance.com

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#2206882 - 02/22/19 07:02 PM Re: Flood Insurance on Contents mdog76
mdog76 Offline
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Joined: Jan 2007
Posts: 645
Sorry for the late update but the contents are being taken so we good from a compliance standpoint. Found out that all the equipment is already pledged as collateral for other loans we have for this customer. I reached out to FDIC examiner and they said it does cross over into safety and soundness and would come down to how much risk the bank/management was willing to take.

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#2206892 - 02/22/19 07:31 PM Re: Flood Insurance on Contents mdog76
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,352
Galveston, TX
In order for contents to require to be covered by insurance, the loan has to be secured by both the building and the contents. If you have one loan on the contents and another loan on the building, then content coverage would not be required. But on commercial type loans, you need to watch out for cross-collateral agreement in your loan documents.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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