Flood Insurance rules have changed continuously over the past few years.
Financial institutions are still dealing with issues and uncertainties regarding flood insurance requirements, including the detached structure exemption, force placement requirements, and escrow provisions. Once complete the FAQs will resolve many of those problems. Other provisions of the flood insurance requirements still plaque many financial institutions.
- When flood insurance is required;
- How to determine the accurate amount of required insurance the borrower must purchase;
- What the purchase requirements are when multiple buildings are located on a property in a special flood hazard area;
- The final requirements for the mandatory acceptance of private flood insurance;
- The detached structure exemption and how to utilize it;
- The requirement to escrow flood insurance premiums and the exemptions allowed from the escrow requirements;
- The rules for force-placing flood insurance;
- Whether increasing a loan balance due to force-placing flood insurance requires an escrow account to be established;
- What steps should be taken if a flood hazard determination does not mirror the special flood hazard area dictated by the insurance company; and
- How a financial institution should monitor those loans designated to be in a special flood hazard area.