What is the minimum amount of flood insurance a lender must require on a residential building located in a special flood hazard area?

What is the minimum amount of flood insurance a lender must require on a residential building located in a special flood hazard area?
A . $50,000 for residential property structures
B . $150,000 for residential property structures
C . $250,000 for residential property structures
D . $350,000 for residential property structures

View Answer

Answer: C

Explanation:

The minimum amount of flood insurance required by lenders for a residential building located in a Special Flood Hazard Area (SFHA) is the lesser of:

100% of the replacement cost of the structure, or

The maximum available under the National Flood Insurance Program (NFIP), which is $250,000 for residential property structures.

This requirement ensures that the property is adequately covered in case of flood damage.

References:

National Flood Insurance Program (NFIP) Guidelines

Flood Disaster Protection Act (FDPA)