Bank made loan to LLC, for the purpose of refinancing and renovating an investment property (rental house), so loan is business purpose. Property is located in a flood zone and requires flood insurance. Bank has set up escrow (which we don't require or do often on business/commercial loans) for taxes and hazard insurance. Should flood insurance also have been escrowed in this situation? I believe based on the exception found at 12 cfr 22.5(2)(i): "The loan is an extension of credit primarily for business, commercial, or agricultural purposes:" that we aren't required to escrow flood insurance, however I wanted to be sure...since we do have escrow in place for taxes and hazard insurance on this particular loan. Again, not our typical practice, but something I saw when reviewing this loan file, so wanted to ask. Thanks.

Not required

As you stated, business purpose loans are exempt from the flood insurance escrow requirements. §339.5(a)(2)(i)
This doesn't change because you escrow for other things.

Thank you both for confirming...wanted to be sure!!!!