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#1955935 - 08/21/14 10:22 PM Inadequate flood policy provided after forceplaced
Tarhe Offline
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Joined: Nov 2006
Posts: 1,403
California
Flood insurance on a commercial building expired in May. After 45 days, we force placed a $500,000 policy. Borrower has now purchased a $250,000 effective Aug. Do we:

1) Cancel the force-placed policy, accept the borrower’s $250,000 policy and start another 45 day letter cycle requesting the borrower to increase his policy to $500,000?
2) Accept the borrower’s policy and reduce the force-placed policy to $250,000 and notify borrower to increase – while retaining both policies? OR
3) Keep the $500,000 force-placed policy in place until borrower increases his policy to $500,000? (Can we do that?)

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#1955946 - 08/21/14 11:38 PM Re: Inadequate flood policy provided after forceplaced Tarhe
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
3 is your only option, unless you have a private insurance carrier that will re-write the policy with a $250,000 deductible.
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#1956019 - 08/22/14 01:39 PM Re: Inadequate flood policy provided after forceplaced Tarhe
Combustible Offline
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Joined: Dec 2008
Posts: 1,268
Can't have two policies on one building, so how does that play into #3?

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#1956029 - 08/22/14 01:50 PM Re: Inadequate flood policy provided after forceplaced Tarhe
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
Can't have 2 NFIP policies, you can with private insurance.
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#1956250 - 08/22/14 06:52 PM Re: Inadequate flood policy provided after forceplaced Tarhe
Combustible Offline
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Joined: Dec 2008
Posts: 1,268
Wow, all this time I thought it carried over to private insurance also. Thanks.

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#1956260 - 08/22/14 07:14 PM Re: Inadequate flood policy provided after forceplaced Combustible
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,403
California
Our force-placed policy is a private policy - therefore, we should go with option #2? Inform borrower to increase to $500,000 while we reduce our force-placed to $250,000 - there will be 2 policies in place (ours & theirs) each for $250,000?

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#1956370 - 08/22/14 09:32 PM Re: Inadequate flood policy provided after forceplaced Tarhe
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Option #2 does you absolutely no good. Insurance is not cumulative. You don't add policy amount together. One policy (your private policy) would have to be at $500,000 with a $250,000 deductible (the amount the borrower's policy would pay). It would then act like an umbrella policy.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1962874 - 09/18/14 04:24 PM Re: Inadequate flood policy provided after forceplaced Tarhe
AngelMae CRCM Offline
Member
Joined: Aug 2012
Posts: 68
Indiana
Aren't there limits on deductibles?? Or is the private insurance the key here? We are being told by our private insurer that we do the difference between the two (in the case of inadequate flood insurance) since they won't do deductibles that high. What kind of discussion do I need to have with them?

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#1963094 - 09/19/14 02:49 AM Re: Inadequate flood policy provided after forceplaced Tarhe
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
We are being told by our private insurer that we do the difference between the two (in the case of inadequate flood insurance) since they won't do deductibles that high.

I think you need to find a new insurance agent unless you have read one of their insurance policies and it actually says it will pay over and above on a loss after another insurance policy pays. It would have to be classified as an excess and not a primary policy.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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