We have a loan for a condo unit with flood coverage of $28,000. The agent says that this covers from the walls in of the condo and has been satisfactory with other institutions. The loan amount is $56,000. Anyone familiar with condo units in a flood zone care to advise?

That is the owner's policy...which is good to have. You need to obtain the COA's RCBAP dec page that covers the building, itself.

From what I understand, the COA doesn't have an overall Flood Policy.

That's not good.

At any rate, you still have to have the normal amounts.

Lower of: (assuming residential condo)

Replacement Cost Value (this could be tricky)
Loan
Max insurance ($250k)

We are verifying if the COA actually has a flood policy or not.

A single dwelling policy on a unit in a condo complex is basically worthless without an underlying RCBAP. You might as well be making the loan unsecured.

Randy, I started to say about the same thing you did, but then thought about it...if your dwelling policy covers the loan amount, in the event of a loss on a building which is ignorantly non insured by the COA...wouldn't it at least pay the loan off?

I'm piggy back on this topic to ask a question on condo flood insurance.

Loan amt is $349,000
RCBAP replacement cost is $3,684,485 (building has 20 units)
coverage amount is $3,250,000

Am I correct to think that the coverage is insufficient and they need to obtain coverage in the amount of $3,684,485 which is 100% replacement cost?

Like Joker said above, you need:

Lower of: (assuming residential condo)

Replacement Cost Value (this could be tricky)
Loan amount
Max insurance ($250k)

Thank you for your response. I know that it's the lesser of the 3. It just appears that they are under insured when you look at the numbers.

Obviously we're not going by the loan balance or the max under NFIP because it is higher than the RCV stated on their RCBAP. RCV is 3,684,485 which is $184,224 per unit and the coverage is $3,250,000 which is $162,500 per unit. They appear to be underinsured, correct?

Yes, it appears they need an individual policy for the difference. At this point, it doesn't appear there would be a co-insurnace penalty involved upon total loss. That's always a bit of a gamble anyway as costs change with supply and demand, etc.

Thank you!

Not if their condo is on the sixth floor and the first four floors are flooded. There is no damage to that specific unit, but the condo complex is ruined. Unless the association and the other owners can come up with the repair costs, your collateral is worthless.

Good point! Thanks for chiming back in (I almost missed it!)