SBA SOP 50 10 8.1, A.Ch5.C.1 — Hazard Insurance

sba-sop81-a-ch5-c-1

Verbatim text of SBA SOP 50 10 8.1 (with Technical Policy Updates) section A.Ch5.C.1 (Hazard Insurance). Effective 2026-10-01 for applications received by SBA on or after that date; SOP 50 10 8 governs applications submitted through 2026-09-30. 1 provision(s) quoted from SBA's .docx.

This register: .xlsx .csv

See also

SBA lending corpus: SOP 50 10 and the active notices, with the expiry watcher.

Verbatim regulatory text (1)

Verbatim provisions from SBA SOP 50 10 8.1, A.Ch5.C.1 — Hazard Insurance — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.

SOP 50 10 8.1 A.Ch5.C.1

Effective 2026-10-01 · publisher's stamp for this provision

C. Insurance Requirements SBA Lenders must ensure all appropriate insurance requirements are included in the SBA Terms and Conditions and SBA Lender’s credit memorandum. 1. Hazard Insurance 13 CFR § 120.160(c) a. For 7(a) loans greater than $50,000, and for 504 projects greater than $50,000, SBA requires hazard insurance on all assets pledged as collateral. If hazard insurance is not available, the loan cannot be approved. The Borrower must also maintain a separate policy if the business is located in a state that requires additional coverage such as wind, hail, earthquake, or other. This policy applies to all loans except the following: i. For loans of $500,000 or less, if residential real estate is pledged as collateral and the lien will not be in first position, and if hazard insurance cannot be obtained, then it is not required on the residential real estate; and ii. For loans of $500,000 or less, if the full replacement value of the business’s assets is $50,000 or less. b. Real Estate i. Coverage must be in the amount of the full replacement cost. ii. If full replacement cost insurance is not available, coverage must be for the maximum insurable value. iii. Insurance coverage must contain a MORTGAGEE CLAUSE (or substantial equivalent) in favor of the 7(a) Lender (for 7(a)), or the CDC/SBA (for 504),. This clause must provide that any action or failure to act by the mortgagor or owner of the insured property will not invalidate the interest of the 7(a) Lender (for 7(a)), or the CDC/SBA (for 504). The policy or endorsements must provide for at least 10 days prior written notice to the 7(a) Lender (for 7(a)), or the CDC/SBA (for 504), of policy cancellation. c. Personal Property i. Coverage must be in the amount of full replacement cost. ii. If full replacement cost insurance is not available, coverage must be for maximum insurable value. iii. Insurance coverage must contain a LENDER'S LOSS PAYABLE CLAUSE (or substantial equivalent) in favor of the 7(a) Lender (for 7(a)), or the CDC/SBA (for 504). This clause must provide that any action or failure to act by the debtor or owner of the insured property will not invalidate the interest of the 7(a) Lender (for 7(a)), or the CDC/SBA (for 504). The policy or endorsements must provide for at least 10 days prior written notice to the 7(a) Lender (for 7(a)), or the CDC/SBA (for 504), of policy cancellation. d. Exceptions for SBA Express and Export Express If the Lender does not require hazard insurance (for example, if it would impose an undue burden on an Applicant given the small size of a loan), the Lender must document the reason in its loan file.

Source: SBA SOP 50 10 8.1, A.Ch5.C.1 — Hazard Insurance · source URL · snapshot 0fb0c4692cf52938

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Source of record: https://claudeforcompliance.com/regs/sba-sop81-a-ch5-c-1/ · register sba-sop81-a-ch5-c-1 · verbatim, source-snapshotted regulator text from the Claude for Compliance corpus. To work from every register at once, download the corpus and follow the methodology.