We have a loan to a borrower on his condo unit for $450K. The policy we received is for $500K but the insured is the condo association not the unit owner. I called the agent to inquire further and was told that since the building is 52% commercial the NFIP will only allow the maximum of $500K for the building. It doesn't appear that this policy covers our borrower at all, should we request additional coverage?

If it is primarily commercial, you probably do have the max...and it would be in the name of the association, not your borrower.

He can possibly obtain additional insurance to cover from walls in.

I understand why the building is only covered for $500K, but how does that cross over to the unit owners in the building when their units are selling for $450K to $500K. Should we have asked for additional insurance coverage or we in compliance on this loan?

Non-Residential Condominium Unit

The owner of a non-residential condominium unit
cannot purchase a unit owner's policy.

We have one that does carry his own...I believe that would be a private policy, however...it covers from walls in.