Property includes 1 residential structure and 2 barns - all are in the flood zone. (Note: The residential structure is a hunting lodge that is rented out through VRBO and also on a per bed basis during hunting season.)

Loan Amount = $700,000

Maximum NFIP = $1,250,000
Residence - $250,000
Barn 1 - $500,000
Barn 2 - $500,000

Total Insurable Value = $1,050,000
Residence - $700,000
Barn 1 - $100,000
Barn 2 - $250,000

I believe that the required amount of insurance is $700,000 since that is the "lesser of". It is my understanding that we can allocate the $700,000 in varying amounts. However, we cannot allocate more than $250,000 to the residence and would need to allocate the remaining $450,000 between the two barns, even though their insurable value is only $350,000. Is that correct?

Required insurance

Residence $250,000
Barn 1 $100,000
Barn 2 $ $250,000

You cannot over insure the barns. You cap the insurable value in the calculation on any building at the maximum insurance amount.