In certain instances our bank requires the borrower to maintain flood insurance in excess of the minimum requirement by the flood regulation. In some instances the borrower will obtain a $250,000 NFIP policy fro a dwelling and then obtain a private insurance policy for the remaining amount required. In this situation, the NFIP policy satisfies the requirements of FDPA. Would the bank be required to perform a review on the private policy if the compliance aid statement is not within the policy / stated on the declarations page? Would a review of the property covered, amount, bank as mortgagee, flood zone, and effective date suffice for the bank required private policy portion?
In your situation, the loan was in compliance with requirements for flood insurance without the addition of private flood insurance. The rules regarding private flood insurance apply when the borrower requests the lender to accept private insurance instead of FEMA coverage. The private insurance rules do not appear to apply to your loan.
That said, I would encourage you to apply the private flood insurance concepts to assure the private policy provides the protection your bank seeks. Is the company legitimate and strong? Of course, you want to understand how the private policy addresses property covered, amount, bank as mortgagee, flood zone, and effective date. You also want to understand how the private policy interacts with the FEMA policy? It appears you want the private policy to provide excess coverage beyond the FEMA. Does it?