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#2152405 - 11/06/17 06:57 PM Flood Insurance Unit Owner in Other Residtl Bldg
lucyc Offline
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lucyc
Joined: Jul 2007
Posts: 1,074
Our customer is a residential unit owner in a other residential building. The building has $500k in flood coverage, 16 units and replacement cost per the flood insurance policy is $2,184,652. When the loan closed requested our customer to get additional coverage for the unit.

Our customer has recently experienced damage and was told by their adjuster and agent that the individual policy was not needed. I advised Lending personnel that we would need a copy of the master policy to determine if any type of interior damage would be covered. Is it possible for a master policy to cover interior unit damage? Is it possible that the individual policy is not needed?

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Flood Compliance
#2152427 - 11/06/17 08:59 PM Re: Flood Insurance Unit Owner in Other Residtl Bldg lucyc
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
If it is not a condo, then under the NFIP there is only $500,000 available for the entire structure for other residential properties. They would have had to buy private insurance.
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#2152471 - 11/07/17 02:30 PM Re: Flood Insurance Unit Owner in Other Residtl Bldg lucyc
lucyc Offline
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lucyc
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Posts: 1,074
Thank you. To clarify we have determined that the collateral to our loan is a unit in a cooperative. Based on your response, the NFIP minimum requirement is $500K for the building which is the coverage we have in place. We as the lender to the unit owner have the option to require additional flood insurance for the unit interior but are not mandated to require as such per NFIP. That being said, we requested our customer to purchase a individual flood policy which they did. Is my understanding correct?

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#2152476 - 11/07/17 02:56 PM Re: Flood Insurance Unit Owner in Other Residtl Bldg lucyc
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
They can purchase contents coverage. I'm not sure what you mean by unit interior. Ten percent of the contents coverage may be applied to betterments and improvements at the time of loss.
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#2152511 - 11/07/17 05:04 PM Re: Flood Insurance Unit Owner in Other Residtl Bldg lucyc
lucyc Offline
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lucyc
Joined: Jul 2007
Posts: 1,074
Our unit owner's policy lists building coverage and contents. I have a feeling that the underwrote the HO6 policy as a condo not realizing it's a co-op. That being said, if it's not underwritten correctly I don't know if the policy is actual valid. Thoughts/comments?

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#2152513 - 11/07/17 05:09 PM Re: Flood Insurance Unit Owner in Other Residtl Bldg lucyc
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
The NFIP is not going to pay for the building loss once the dust settles.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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