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Valuation of contents

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Question: 
When assets inside the building also secure the loan, such as through a business security agreement, how often must we review the value of those contents to ensure sufficient contents coverage? What if there are no contents only other non-insurable assets, can we document the file to show no assets are insurable and not require contents coverage
Answer: 

You must obtain the correct amount of flood insurance at the time a loan is made, increased, renewed, or extended. If you obtain the correct amount of contents coverage at the time of the MIRE event, then the contents coverage does not need to be re-evaluated until the time of the next MIRE event.

The language of the security agreement lists the items included in the collateral. If there are no such items in the building, or if such items cannot be insured (please note that pretty much any type of personal property can be insured) then contents coverage would not be needed.

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Learn more about Jack Holzknecht’s webinar Frequent Flood issues

First published on 11/15/2020

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