The bank's Flood Policy states that condominiums are required to have flood insurance only if they are subject to separate ownership and have legal descriptions. Is that correct?

From FEMA, re: condos

http://www.floodsmart.gov/floodsmart/pages/choose_your_policy/condo_renter.jsp

Residential Condominium Building Association Policy (RCBAP) Form
The Residential Condominium Building Association Policy Form (PDF 328KB, TXT 76 KB)-- Issued to residential condominium associations on behalf of association and unit owners.

In participating NFIP Regular Program* communities only, provides building coverage and, if desired, coverage of commonly owned contents for residential condominium building with 75% or more of its total floor area in residential use.



*Regular Program- The final phase of a community's participation in the National Flood Insurance Program. In this phase, a Flood Insurance Rate Map is in effect and full limits of coverage are available under the Act.

**Emergency Program-The initial phase of a community's participation in the National Flood Insurance Program. During this phase, only limited amounts of insurance are available under the Act.

Your policy specifics seem insufficient. IF it's a commercial condo, then the building will be limited to $500K, but FI is required, although it wouldn't meet the description you laid out above.