Skip to content
BOL Conferences
Thread Options
#2208469 - 03/12/19 03:34 PM Low Value residential structure - flood insurance
RafterJB Offline
Junior Member
Joined: Sep 2015
Posts: 28
Residential structure is located in flood zone A, which requires flood insurance. Residential structure appraised for $15,000. Loan amount is $149,000 and max available is $250,000. Customer does not carry hazard insurance on the structure as it is not worth much and it will not be replaced if something happens to it. It is used as a rent house for minimal rent. We are having a hard time determining flood insurance amount without a hazard policy to help determine replacement cost. What do we do in this case? We are thinking we should go with the appraised value in this case as it is closer to the actual value of the structure. Any other ideas or are we looking at it correctly? Thanks!!

Return to Top
Flood Compliance
#2208479 - 03/12/19 03:52 PM Re: Low Value residential structure - flood insurance RafterJB
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,226
Galveston, TX
Q&A #9

In calculating the amount of insurance to require, the lender and borrower (either by themselves or in consultation with the flood insurance provider or other appropriate professional) may choose from a variety of approaches or methods to establish the insurable value. They may use an appraisal based on a cost-value (not market-value) approach, a construction-cost calculation, the insurable value used in a hazard insurance policy (recognizing that the insurable value for flood insurance purposes may differ from the coverage provided by the hazard insurance and that adjustments may be necessary; for example, most hazard policies do not cover foundations), or any other reasonable approach, so long as it can be supported.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2208481 - 03/12/19 04:09 PM Re: Low Value residential structure - flood insurance RafterJB
RafterJB Offline
Junior Member
Joined: Sep 2015
Posts: 28
Thank you Randy!!! Where can I find the FAQ's? I tried searching yesterday, but could not find what I was looking for...

Return to Top
#2208488 - 03/12/19 04:29 PM Re: Low Value residential structure - flood insurance RafterJB
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,226
Galveston, TX
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2208497 - 03/12/19 05:02 PM Re: Low Value residential structure - flood insurance RafterJB
RafterJB Offline
Junior Member
Joined: Sep 2015
Posts: 28
I should have known that!! Thanks Again!!

Return to Top