Calculating Amount of Required Hazard Insurance

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Question:

Is the amount of hazard insurance that should be required on a real estate secured loan calculated as the appraised value less land value or loan amount less land value? Does it differ according to property type?

Answer:

The amount of hazard insurance coverage is not governed by regulation. It's purely based on the bank's internal policies based on the bank's perception of the risks presented.

First published on BankersOnline.com 2/04/08