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Pierre Granger AAI, CIRMS, LCAM, NSI Insurance Group Jul 6, 2015 2 min read

Condominium Flood Insurance

Residential Condominium Building Association PolicyThe National Flood Insurance Reform Act of 1994 (NFIRA) mandated that all homes receiving a federally backed mortgage loan must have flood insurance when the home is located in a Special Flood Hazard Area in a participating community. Condominium owners must remember that the mortgage portfolio protection program (MPPP) allows mortgage companies to force a flood policy on a condo when the insured has not secured a flood policy on their own. Below is more information on condominium flood insurance.

The following elements apply to a residential condominium building association insurance policy (RCBAP):

Residential Condominium Building- A building, owned and administered as a condominium containing one or more family units, and in which at least 75% of the floor area is residential.

Rating Information
- Only buildings having a condominium form of ownership are eligible for the RCBAP
- Contains one or more residential units, and in which at least 75% of the total floor area within the building is residential in regard to the number of floors or units.
- Co-op buildings are NOT eligible.
- Building and content deductible options are usually available up to $5,000, but certain insurers offer options of $10,000 and $25,000.

Coverage Limits
- Building coverage purchased under the RCBAP will be on a replacement cost basis.

High-Rise Building:
Maximum Building Coverage - Replacement Cost or Number of units times $250,000
Maximum Contents Coverage - $100,000

Low-Rise Building:
Replacement Cost or Number of Units times $250,000
Maximum Contents Coverage - $100,000

Co-Insurance Penalty
- Co-insurance penalty is applied for building coverage only. The co- insurance penalty will be applied, if at the time of loss the association is not carrying insurance purchased in the amount equal to or lesser of 80% or more of the replacement cost of the building or the maximum amount of insurance available under the National Flood Insurance Program, The Condominium Association may not be fully reimbursed for the loss.

Assessment Coverage
- Please note that the RCBAP does not provide assessment coverage.

Consequently, to avoid not having the proper coverage we recommend that the condominium association update their appraisals on a regular basis. The National Flood Insurance Program (NFIP) requires that the Replacement Cost Value be updated every three years.