Thread Options
|
#75183 - 04/23/03 04:35 PM
Flood Ins. on Tall Commercial Building
|
Member
Joined: Feb 2002
Posts: 65
Fitchburg, MA
|
We have a $900,000 commercial real estate loan in process. The commercial building is multistoried and is in a flood zone where flood insurance is required. The building less the land will obviously exceed $500,000. The question has been raised as to why we need $500,000 coverage. The building is multi storied and the argument is that the top stories will not flood. Even if the basement flooded out, all utilities were lost, and the building was gutted, the cost would not be $500,000 to repair. I say we still need $500,000 of flood insurance. Any thoughts?
|
Return to Top
|
|
|
|
#75184 - 04/23/03 04:53 PM
Re: Flood Ins. on Tall Commercial Building
|
Anonymous
Unregistered
|
If the land is worth $900,000 or more, you don't need the flood insurance. If the land is worth over $400,000, you only need the difference between the land value and the loan amount. The answer to your other question is twofold, one because it's the law and also because what if the water knocked the whole building over. Like a tidal wave or something.
|
Return to Top
|
|
|
|
#75186 - 04/23/03 05:44 PM
Re: Flood Ins. on Tall Commercial Building
|
10K Club
Joined: Nov 2002
Posts: 20,654
The Swamp
|
I agree with dp...see the following example:
Appraised value - $1,000,000 less land value - 900,000 Minimum flood ins - $100,000
This will result in the lessor of the amount already listed by dp, yet dispute the fact that flood would not be required if land was worth $900,000 or more.
_________________________
My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
|
Return to Top
|
|
|
|
#75187 - 04/23/03 07:59 PM
Re: Flood Ins. on Tall Commercial Building
|
10K Club
Joined: Oct 2000
Posts: 27,748
On the Net
|
Quote:
We have a $900,000 commercial real estate loan in process. The commercial building is multistoried and is in a flood zone where flood insurance is required. The building less the land will obviously exceed $500,000. The question has been raised as to why we need $500,000 coverage. The building is multi storied and the argument is that the top stories will not flood. Even if the basement flooded out, all utilities were lost, and the building was gutted, the cost would not be $500,000 to repair. I say we still need $500,000 of flood insurance. Any thoughts?
Points to ponder on the comment about the top not flooding,
* how do the ones in the top get down if the bottom is flooded?
* if the bottom floors collapse because of rapid erosion, the top becomes the bottom and it is too late for a policy.
* remember that this coverage is not aimed at your customer or your bank, but at emergency disaster funds of the US Government.
_________________________
AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
|
Return to Top
|
|
|
|
#75188 - 04/24/03 02:29 PM
Re: Flood Ins. on Tall Commercial Building
|
Member
Joined: Feb 2002
Posts: 65
Fitchburg, MA
|
Thank you for all your input. As I attempted to explain to my commercial officers, there is no way around requiring the mandatory coverage.
|
Return to Top
|
|
|
|
#75189 - 04/24/03 10:02 PM
Re: Flood Ins. on Tall Commercial Building
|
Power Poster
Joined: Jan 2002
Posts: 2,706
|
If you need examples of what can happen, find old footage of Grand Forks and Fargo, North Dakota. Many multilevel buildings were completely destroyed. Most from the fire that was started as a result of the floods and power line, etc....
_________________________
Beauty is only skin deep...but ugly goes all the way to the bone!
|
Return to Top
|
|
|
|
|
|