We do automobile dealer floorplan lending. Some of these auto dealership's could possibly be in special flood hazard area. What are our responsbilities as far as requiring the dealer to purchase flood insurance on the automobiles we are financing for him? Can we only require the dealer to obtain flood insurance on the auto's if we also have a loan with that dealer that's secured by the building in which the dealership is located and the building is found during our flood zone determination to be in a flood area? If the dealership building is in a flood area, can we only require flood insurance to be purchaed for the value of the automobiles that are displayed inside the dealership building or could we also require the insurance to be purchased for the value of the auto's displayed on the lot outside the dealership building?

From a S&S standpoint, you can require flood insurance whenever (and on whatever amount) you determine that it would be beneficial to protect your interest in inventory collateral.

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