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Allocate Flood Coverage-Multiple Buildings

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How should a bank allocate flood coverage when multiple buildings are on one loan? Here is my example: 1-4 Residences and we need to start the 45-day process for building one. Loan balance: $800,000 Bldg 1: RCV = $235,000; with previous coverage of $250,000 Bldg 2: RCV = $275,000; with current coverage of $250,000 Bldg 3: RCV = $200,000; with current coverage of $250,000 Minimum required would be $685,000, which is bldg 1 = $235,000, bldg 2 = $250,000, bldg 3 = $200,000 If the $685,000 can be allocated any way, what amount would be used for building 1 so as to not be insuring too much?

If you are force placing insurance, you should not force place more insurance than the insurable value of any of the buildings regardless of the coverage previously or currently in place. You have listed the RCV of the buildings, but RCV only applies to a primary residence. Without knowing what the ACV is on each of these structures, it is not possible to answer.

First published on 01/12/2020

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