"And what about a situation where we are financing an 1-4 family investment property (rental house) that is in a flood zone and mortgage makes reference to "personal property". The "personal property" within the this structure (rental house) is most likely owned by tenant, not the property owner. So how do you determine what, if any, content coverage is required in this type of situation???"
I don't have a link to the following but the FDIC Dallas Region Quarterly Newsletter- June 2014 contains a section on Contents Coverage and General Best Practices. This is part of what it includes (emphasis added):
"Some banks use standardized legal documentation for commercial mortgage loans that always takes a security interest in personal property or contents. These banks require the borrower to obtain flood insurance for contents if the conditions described above are met [that the contents are within the building and have insurable value]. Alternatively, unless it is necessary to approve the loan, other banks customize legal documents to not taka a security interest in contents. Contents coverage would not be required in this scenario, since the bank does not have a security interest in personal property. Also, in cases where personal property or contents securing a loan have negligible or no insurable value, affidavits from borrowers or insurance agents have been used to document that Coverage B insurance is not obtainable.
The valuation of personal property or contents is not always straightforward when determining how much coverage is required. The Flood Insurance Q&As from July 21, 2009, and the FDIC Press Release dated October 14, 2011, provide some guidance on this issue, as well as examples for determining insurable value. In general, personal property or contents will be considered to have sufficient amount of flood insurance coverage for regulatory purposes as long as a reasonable method of valuation is used. There is leeway for how the bank determines the valuation, but the bank should be able to document and support any valuation method used."
Hope this helps.