Page 27 of the NFIP mandatory purchase of flood insurance guidelines indicates requirements for calculating coverage. The third bullet point item, Full Insurable value of the Building, which is the same as 100% of replacement cost, does this refer to commercial properties only or to all real estate secured? In other words, is it required to have replacement cost value determined on residential real estate that is determined to be in a flood zone or is the market value minus the land value acceptable for calculating coverage?

Thank you in advance for all your help.

This is a highly debated topic, as commercial structures technically can only be insured for actual cash value (ACV)and not replacement cost value (RCV). When the new MPFIG was issued they inserted this and it has caused quite a firestorm. I would be checking with your regional examiners to see how they are currently looking at this issue.

Thank you for your response.

Would you be able to respond to the issue of market value minus land value used as an acceptable process for calculating insurance amount required?

Thanks again.

You never state with market value for flood insurance purposes. Market value has nothing to do with the insurable value of the property. You have to work with the cost approach within the appraisal.