We are financing a single unit in a condo building. They provided a private policy covering all units, however, coverage was only $150,000 per unit and we required $250,000 per unit . They also provided an excess flood policy which made up the difference.

I know in the NFIP world, this is not an acceptable practice as you must satisfy the coverage requirement with a federal flood policy and any excess is at the borrowers discretion.

Is it any different when I have a private policy and then add the excess to fill the gap?

I say it is not acceptable but I am not able to locate guidance on this subject.

As always - you comments are appreciated.

Thank you

There is no requirement that the flood insurance policy has to be issued by the NFIP. As long as they meet the requirements for private flood insurance policies and they are acceptable to your FI you would be properly covered.

I get that the NFIP is not required - my issue is that the primary private policy does not meet the minimum coverage amount and we are relying upon the excess coverage to make up for it.

OP - I know in the NFIP world, this is not an acceptable practice as you must satisfy the coverage requirement with a federal flood policy and any excess is at the borrowers discretion.

Do you care to give a citation for that statement, because I don't believe it is accurate.

Everything I have read states an excess flood insurance policy allows a policyholder to cover a building value when it EXCEEDS the maximum available limits of the NFIP or private market flood policy.

So if i require a $250,000 flood policy and the private policy received is only for $150,000, is that ok as long as i receive an excess policy that makes up the difference?

As long as both policies meet the private insurance policy requirements, you would be required to accept them under the new rules regardless of the amount of the primary policy and the umbrella policy, as long as together they meet the minimum $ coverage requirements. Insurance is insurance.

ok...thank you