You may be required to obtain flood insurance on the equipment and inventory securing the loans that are also secured by the mortgage. Under the National Flood Insurance Act (NFIA), if a loan is secured by improved real estate located in a flood zone, the lender must ensure that the borrower obtains flood insurance that covers “the building or mobile home and any personal property securing such loan.” 42 USC 4012a(b)see also 12 CFR 22.3(a).

FEMA’s Mandatory Purchase of Flood Insurance Guidelines explains that flood insurance for commercial loans must cover any personal property that is also secured by a loan secured by real property in a flood zone:

“Flood insurance coverage for contents is not required by law unless personal property, in addition to a building, secures the loan…when a commercial loan on a building includes inventory and other trade or business movable property as security for a loan, that property must be covered by a separate policy under the General Property form.” 

2007 Mandatory Purchase of Flood Insurance Guidelines, page 31. (Note that FEMA has rescinded these Guidelines, stating here that the guidelines have become obsolete under the amendments made by the Biggert-Waters Flood Insurance Reform Act of 2012. However, the guidelines are still helpful as persuasive authority, and they are consistent with other agency guidelines and the NFIA.)

In your situation, if the mortgage secures both real property and equipment and inventory, then the personal property will need to be covered by flood insurance. If it is not, than the personal property loan is not a designated loan and does not require flood insurance. Be aware, however, that FEMA still recommends that personal property used to secure loans in flood zones be insured against flood damage. 2007 Mandatory Purchase of Flood Insurance Guidelines, page 32.