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Multiple Buildings – Multiple Flood Zones

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We have a commercial loan on farmland with 12 outbuildings and a dwelling. Only one of the buildings (a small barn) is located in a flood zone that requires insurance. The loan amount is $500,000 and the appraiser valued this building at $70,000. Because only a small percentage of the secured collateral is in a flood zone, is flood insurance still required?

Yes. Flood insurance is required only on the barn. You must provide the borrower/applicant with the Flood Notice and require flood insurance based on the lesser of the maximum coverage allowed under NFIP, the value of the property or the loan amount.


Learn more about Michelle Strickland’s Flood Compliance for Commercial Lenders webinar.

First published on 02/18/2024

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