[Code of Federal Regulations]
[Title 7, Volume 15]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR4279.143]

[Page 578]
 
                          TITLE 7--AGRICULTURE
 
  CHAPTER XLII--RURAL BUSINESS-COOPERATIVE SERVICE AND RURAL UTILITIES 
                   SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 4279_GUARANTEED LOANMAKING--Table of Contents
 
                  Subpart B_Business and Industry Loans
 
Sec. 4279.143  Insurance.

    (a) Hazard. Hazard insurance with a standard mortgage clause naming 
the lender as beneficiary will be required on every loan in an amount 
that is at least the lesser of the depreciated replacement value of the 
collateral or the amount of the loan. Hazard insurance includes fire, 
windstorm, lightning, hail, explosion, riot, civil commotion, aircraft, 
vehicle, marine, smoke, builder's risk during construction by the 
business, and property damage.
    (b) Life. The lender may require life insurance to insure against 
the risk of death of persons critical to the success of the business. 
When required, coverage will be in amounts necessary to provide for 
management succession or to protect the business. The cost of insurance 
and its effect on the applicant's working capital must be considered as 
well as the amount of existing insurance which could be assigned without 
requiring additional expense.
    (c) Worker compensation. Worker compensation insurance is required 
in accordance with State law.
    (d) Flood. National flood insurance is required in accordance with 7 
CFR, part 1806, subpart B (FmHA Instruction 426.2, available in any 
field office or the National Office).
    (e) Other. Public liability, business interruption, malpractice, and 
other insurance appropriate to the borrower's particular business and 
circumstances will be considered and required when needed to protect the 
interests of the borrower.