We have a situation where the flood determination obtained by the bank's vendor indicates that the property is located in flood zone VE. The insurance declarations page indicates that the property is in flood zone X.
The property is a condo on the beach and although the condo association does have flood coverage, it is insufficient(see below:
Total of liens = $370k
Max avail = $250k
Repl Cost = $208,517 per unit (this is according to the estimated replacement cost on the declarations page itself)
The condo association has coverage iao $203,780 per unit. (Which I think is interesting that they estimate the replacement cost to be $1,042,587 but they only have $1,018,900 in coverage).
We have two issues:
1) The flood zones do not match. Since their determination indicates the property is NOT in a flood zone, they could cancel their policy and we would be at risk in the event of a flood.
2) The condo policy is insufficient iao $4,737.
Do we require the borrower to obtain insurance iao $4,737 to compensate for the shortfall in the condo associations coverage? OR...
Do we require the borrower to obtain their own policy iao $208,517 (the replacement cost according to the insurance company)?