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#2270352 - 05/11/22 08:36 PM One Building/Two Flood Policies
Comply13 Offline
Member
Joined: Nov 2013
Posts: 54
USA
We have a borrower that has presented us with two flood insurance policies for one building. When we questioned why there are two policies, the insurance agent cited the FEMA definition of a single building – a building that is separated from other buildings by intervening clear space or solid, vertical, load-bearing division walls. In this situation it is a commercial building with two separate spaces that they say are separated by solid, vertical, load-bearing division walls.

Does this qualify the spaces into two separate buildings and allow for the two separate NFIP flood policies? If so, is the bank obligated to verify and document this is acceptable? What documentation is commonly used to do this? Should we track both policies or only one?

What about other commercial buildings that have solid, vertical, load-bearing division walls that only have one policy for the entire building? Should we be requiring more policies or is that up to the discretion of the building owner/insurance agent?

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Flood Compliance
#2270367 - 05/12/22 02:46 PM Re: One Building/Two Flood Policies Comply13
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
If it qualifies as two buildings under NFIP definitions, it requires two policies. On other structures - yes, you would be responsible to make sure you have the proper flood insurance policies in place.
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