We have a business customer wanting to do a business loan to finance the construction of multiple townhomes that are in a flood zone. Most of the them are 1 building with 4 units in the building. How do you calculate the amount of coverage needed on this? For the max amount, would you do 1 policy per building and then the coverage is $250,000 x number of units? So for a townhome with 4 units, you'd have 1 policy for max coverage of $1,000,000?

Well, you either have a 1-4 family unit or four separate townhomes that just happen to be attached to one another. Typically, you would need four policies.

If a commercial borrower is buying two structures, one consists of 9 townhouses, the other consists of 8 townhouses with no content coverage. How would we calculate the coverage amount? Would it be calculated as

Option 1 - $500,000 per structure (2) = $1,000,000, or
Option 2 - $250,000 x 8 = $2,000,000 on one and $250,000 x 9 = $2,250,000 on the other totaling $4,250,000?

Usually each townhome is a single building for flood insurance, so most likely it would be option #2.

Flood Insurance Manual

Single Building: A building that is separated from other buildings by intervening clear space or solid, vertical, load-bearing division walls.

We recently had a situation like the one you are describing. Townhomes own the land and have their own distinct legal description despite the fact they are connected with a common wall. And yes normally they require their one flood policy. However construction is a little different.
When townhomes are built, there is one foundation, and four exterior walls around the entire structure. Then they start building the four unit within the four walls. We are a lender who requires flood coverage at closing (not when walls are erected) so we required the builder to purchase one flood policy for $250,000 because this is a 1-4 family dwelling. As the units are sold, the individual owners would be required to purchase their own flood policy if the unit is financed.

Just because that is the way you do it does not make it correct. They are either four separate buildings or they are not. The stage of construction makes no difference.