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I received a letter from my bank stating I am required to have flood insurance for my property and the amount of the policy I presently have is not sufficient. The letter stated that the bank intends to force-place a policy if I do not provide proof of sufficient coverage. Can the bank do that?

Yes. The bank, or the servicer acting on behalf of the bank, is required by law to purchase flood insurance on the borrower's behalf (that is, force-place) if ALL of the following circumstances occur:

  • The bank determines at any time during the life of the loan that a building or mobile home securing the loan is located in a Special Flood Hazard Area (SFHA).
  • Flood insurance for the property is available under the National Flood Insurance Act.
  • The bank determines that there is no flood insurance coverage on the property, or the coverage is inadequate.
  • The bank sends a notice to the borrower stating that the borrower should obtain, at the borrower's expense, flood insurance at least equal to the amount required by law, for the remainder of the loan's term, and
  • The borrower does not buy sufficient insurance within 45 days of receiving the notice.

The bank or servicer must force-place coverage, and the bank or servicer may charge the borrower for the cost of premiums and fees to obtain the coverage.

Refer to 42 USC 50 "National Flood Insurance Act."

Last Reviewed: April 2021

Please note: The terms "bank" and "banks" used in these answers generally refer to national banks, federal savings associations, and federal branches or agencies of foreign banking organizations that are regulated by the Office of the Comptroller of the Currency (OCC). Find out if the OCC regulates your bank. Information provided on should not be construed as legal advice or a legal opinion of the OCC.

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