Condo Flood Coverage
Answer by Dan Persfull, BOL Guru Guru Bio
Question: Homeowner's association of a 5 unit residential condo has a master flood policy in the amount of $618,000. We are providing a loan on one unit valued at $390,000 and loan amount of $235,000. Do we have to request that the borrower ask the HOA to allocate $235,000 worth of Flood insurance coverage for this loan? Or can we use the HOA's current coverage in the amount of $618,000 which was determined to be the replacement cost at some point?
Answer: The HOA does not allocate coverage to individual units. Under your scenario each unit is insured for $123,600 (618,000 / 5). If the current replacement cost value of the building is $618,000 then you have the maximum insurance available from the NFIP.
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