The commercial condo is eligible for insurance. It is no different than a residential condo, just that the limits are less. So with that said, the commercial condo association has to have insurance on the building under a General Property Form (limit $500,000 for the entire building). The fact that you are lending over $500,000 on one unit in a building that doesn't allow for replacement coverage is a credit risk decision.
The opinions expressed here should not be construed to be those of my employer: PPDocs.com