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Compliance Alliance Featured Q&A
Regarding flood insurance requirements for commercial buildings, does the bank have to require coverage for all buildings on the property?
Yes, each building that secures the loan must be covered by some amount of insurance, but how much coverage is to be required on each building is determined by the bank. It is important to remember that the total amount of required flood insurance is the lesser of: (a) the outstanding principal balance of the loan(s); or (b) the maximum amount of insurance available under the NFIP, which is the lesser of: (i) the maximum limit available for the type of structures or (ii) the “insurable value” of the structures. So the amount of total flood insurance required is allowed to be allocated among all the building securing the loan in varying amounts, but the one fact remains key: all buildings in the SFHA must have some coverage. Reference: Check box 20z if a different identification was provided and describe that identification in the “Other” text field. “Other” identification could include such things as an entity’s business license or incorporation documents, corporate ID cards, local government ID cards, etc. For more information, visit FinCEN CTR Filing Instructions (p. 99).
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