§ 1955.69 - Insurance.

Insurance in force at the time property is acquired will not be cancelled; however, no additonal premiums will be paid, except as follows:

(a) If organization-type property is operated by the Government after acquisition, workman's compensation coverage will be obtained. If the property is located in a flood-hazard area and operation of the property continues, flood insurance will be continued in force. Premiums will be paid in accordance with FmHA or its successor agency under Public Law 103-354 Instruction 2024-A, (available in any FmHA or its successor agency under Public Law 103-354 Office) and charged to the inventory account as a nonrecoverable cost.

(b) If there is an outstanding claim at the time of acquisition, it will be handled in accordance with Subpart A or B of Part 1806 of this chapter (FmHA or its successor agency under Public Law 103-354 Instruction 426.1 or 426.2). If property was acquired subject to a prior lien, the servicing official shall advise the prior lienholder that the Government does not intend to carry insurance, except as provided in paragraph (a) of this section. If, however, the prior lienholders mortgage requires the borrower to carry insurance, FmHA or its successor agency under Public Law 103-354 may provide the required insurance, if necessary, to prevent foreclosure by the prior lienholder.