SBA SOP 50 10 8, A.Ch5.C.1 — Hazard Insurance
Verbatim text of SBA SOP 50 10 8 section A.Ch5.C.1 (Hazard Insurance), effective 2025-06-01. 3 provision(s) quoted from the SOP PDF. SBA's own document page serves superseded editions, and the SOP is further amended by policy notices — read this with the notices that touch it.
Verbatim regulatory text
Verbatim provisions from SBA SOP 50 10 8, 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 A.Ch5.C.1
1. Hazard Insurance 13 CFR § 120.160(c) 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. 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.
SOP 50 10 8 A.Ch5.C.1.iii
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. 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.
SOP 50 10 8 A.Ch5.C.1.iii.iii
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. 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.
Operationalizing SBA SOP 50 10 8, A.Ch5.C.1 — Hazard Insurance
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To work from the whole rulebook rather than this one page: download the corpus — every register on this site, verbatim, each with its source snapshot and effective date — then follow the methodology. It asks your assistant to answer only from the downloaded text, cite the register id and effective date it used, and tell you when the corpus does not cover something instead of filling the gap from memory. Running it locally also means no one sees which regulations you are looking at.
Source of record: https://claudeforcompliance.com/regs/sba-sop-a-ch5-c-1/
· register sba-sop-a-ch5-c-1 · Claude for Compliance. Free to read and download;
see regulatory updates and methodology.