We have a loan where the hazard coverage on a condo is $1,709,200 @ 12 units for a replacement cost of $142,433 per unit.

The flood coverage; however, is $2,270,200 @12 units for coverage of $189,183 per unit. The declaration page for flood indicates the replacement cost is $2,270,200.

Which one do we use to calculate the amount of coverage required? The hazard amount or the replacement cost indicated on the flood policy?

The total of liens is much higher than any of these figures, so I am left with choosing between $142,433 or $189,183.

In the past, we have been using the hazard amount as our basis for replacement cost. Is this correct?

The RCBAP is listing a RCV (which is higher than the hazard). We go with the Flood Policy number and in this case I'd definitely go with the higher!

I'm assuming they are through two different insurance companies?

Yes...the hazard and flood companies are different.

My concern is that we have an insurance calculation worksheet that we've been using for a while now, with no real criticism, but in this case, the calculation would pull in the replacement cost from the hazard policy (since it is lower).

I am wondering if I should change our worksheet to indicate that the replacement cost figure provided on the flood declarations page is the one that we should use.

Is there any guidance specifically on this topic (whether to use the hazard replacement cost figure vs. the flood replacement cost)?

That would be my advice especially for RCBAPs since it's required by law they disclose the RCV.

Okay...this brings me to another concern...in the MPFIG (page 47) it says :"Any building at risk of flooding should be protected to the same degree as it is for fire and wind perils, to the extent possible under the NFIP policy limits, which are established by Congress".

Given the above scenario...one insurance company says it would cost more to replace the building in the event of a flood, but another insurance company says it would cost less to replace in the event of a fire.

So, should we be concered about the building possiblly not being adequately covered from a hazard stand point?

Or, do we rest on the fact that flood coverage is a regulatory requirement, and hazard is not, and just go with what the RCBAP indicates as the RCV and move on?

I would certainly question the two numbers being so far apart from each other. YOu still need to consider things from a S&S standpoint.

What if the hazard replacement cost was higher and the flood replacement cost was the lower figure(reverse scenario). Should we push for an explanation for the difference from the insurance companies, or simply make it a practice to always use the RCV on the RCBAP for purposes of calculating the required amount of flood coverage?

That's a good question. If you have 100% of the stated RCV, that's all FEMA expects...but if I was aware there was a large difference, I would probably be looking into it...but I'm obnoxious like that!

Another thing to consider is the hazard policy won't consider below-ground or hazard proof parts of a structure, whereas flood values must consider the entire building. That could also account for your difference.