Our loan would be secured by a single commercial condo unit and its contents, within a 5 unit commercial building. Our applicant has secured sufficient contents coverage. The structure itself is insured through the NFIP in the name of the Condo Association, however, the NFIP building coverage is insufficient. The Condo Association is unwilling to increase coverage to an adequate level. Understanding that a commercial condo unit owner cannot purchase building coverage through the NFIP, could the unit owner instead purchase private flood insurance on the building to supplement the NFIP coverage, in order to arrive at an adequate total amount? Or is the unit owner prohibited from purchasing a private policy on the building?

The entire commercial building under the NFIP is only eligible for $500,000 in coverage. Can a borrower buy an individual private policy? That is a question for an insurance company. Can you require that they do that - sure - it would be a safety and soundness decision.

You do not say however, how much coverage the condo association has - how much is the NFI P policy?

The condo assn carries an NFIP policy on the building in the amount of $32,000. The NFIP policy dec page is absent a stated insurable value. We do have an insurable value component to the appraisal which estimates the insurable value of the building to be $400,000.

Without the borrower obtaining an acceptable private policy then, you are done with this loan request.

That's what I thought. Thank you.