We have a customer that is borrowing $100,000 to build a garage on his property he already owns. We are taking the house for collateral. Both the house and the garage being built are in the high risk flood zone. We originally had a policy for $105,000 which would have covered the house and the loan amount. Then we found out the garage being built would also be in the flood zone. We believe we need two separate policies, one for the garage and one for the house, but the insurance agent is saying he cannot insure the garage because it is not built yet. (He talked to FEMA and they told him they couldn't insure it until it was complete.)

Am I correct in asking for a flood insurance policy for the garage that is going to be built? And do we need a separate policy for each structure?
Thanks in advance.

If the garage will be for personal use, it will likely qualify for the detached structure exemption and wouldn't require a separate policy.