You determine flood insurance requirements by taking the lesser of:
- The current outstanding principal balance of the loan
- The maximum amount available under the NFIP
Whichever of those two numbers you come up with, the amount of the insurance will be capped by the insurable value of the improvements (overall appraised value minus land value).
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Jim Bedsole, CRCM, CBA, CFSA, CAFP
My posts - my opinions