Answer:
From the Flood Insurance FAQs:
64. When may a lender rely on a privateinsurance policy that does not meet thecriteria set forth by FEMA?
Answer: A lender may rely on aprivate insurance policy that does notmeet the criteria set forth by FEMA onlyin limited circumstances. For example,when a flood insurance policy hasexpired and the borrower has failed torenew coverage, private insurancepolicies that do not meet the criteria setforth by FEMA, such as privateinsurance policies providing portfoliowideblanket coverage, may be usefulprotection for the lender for a gap incoverage in the period of time before aforce placed policy takes effect.However, the lender must still forceplace adequate coverage in a timelymanner, as required, and may not relyon a private insurance policy that doesnot meet the criteria set forth by FEMAon an ongoing basis.
First published on BankersOnline.com 11/23/09
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