Is a certificate of property insurance or evidence of insurance form acceptable proof of insurance for the purchase of a condominium?

Bump

Bump Bump

Page 26 of the Mandatory Purchase Guidelines:

Acceptable proof of coverage may be a copy
of the Flood Insurance Application and
premium payment, or a copy of the
Declarations Page. The NFIP does not
recognize binders or certificates of
insurance.

For a new loan with a new policy - I have a "Temporary Declaration - Pending Policy Issuance" - "Flood General Policy Declaration - New Business" with proof of payment. It appears acceptable to me ... but this is such a hot issue, I'd like an opinion. Thank you. And sorry - this is not a condo - it's a commercial property.

Thank you Dan for the reference in the guidance. I was aware of it but I was wondering if there were any exceptions for condos that I may have overlooked.

MPComply, do you use the "flood general policy declaration- new business" if the certificate or evidence of insurance documents that there is policy in place for the condo association? What proof of payment do you use?

In regards to my original question regarding residential condos, does anyone else have any suggestions/ideas regarding acceptable proof of insurance. Do you all require what is stated in the guidance?

My question was not for a condo... my apologies.... I asked it in the incorrect thread. For condo's we require the Residential Condominium Building Association Policy (RCBAP) and require that it includes replacement cost value of the building and the # of units.

So to clarify you request a copy of the declaration page of the RCBAP or do you accept certificates/evidence of property insurance forms?

The certificates and evidence of property insurance forms have the RCV and # of units.

We do not accept certificates or evidence forms - the rule is RCBAP, and the examiners will require it. Our first OCC exam is next month (we used to be OTS) -- flood is a hot issue for them this year... don't let a condo association or an insurance company tell you they can't provide it.

The only time a certificate is acceptable is when one is provided for the renewal of an existing policy.



Binder or Certificate of Insurance--A temporary agreement between company, producer, and insured that the policy is in effect. The NFIP does not recognize binders. However, the NFIP recognizes Certificates of Insurance for renewal policies.

Sorry but I need to make sure I completely understand this. For some reason Flood always confuses me.

If we have a new condo loan and the agent provides a certificate of insurance or evidence of property insurance of an existing insurance policy for the condo association is this acceptable or do we need to require a copy of the declaration page of the RCBAP?

What about a new loan single family residence or commercial building, do we stll need copies of the declaration pages or are the certificates/evidence forms acceptable?

do we need to require a copy of the declaration page

That one.

As Dan indicated: The only time a certificate is acceptable is when one is provided for the renewal of an existing policy.

OK, Thanks.

Sorry for the multiple questions.

Sorry to rehash but I just came across the following which is on page GR 14 of the 2011 Mandatory Flood Insurance Guidelines:

"A copy of the Flood Insurance Application and premium payment, or a copy of the declarations page, is sufficient evidence of proof of purchase for new policies. The NFIP does not recognize binders. However the NFIP recognizes Certificates of Property Insurance, Evidence of Insurance, and similar forms provided for renewal policies if the following information is included:..."

It goes on to list 11 items and a foot note.

My question is if we are booking a new loan that has an existing policy can we accept the certificates or evidence of insurance as proof of insurance? For example, a new condo loan for a unit owner where the condo association has an existing policy. Another example is a new refinance where the borrower has an existing policy.

No. The certificates are only acceptable for the renewal of the policy and you are not renewing the policy. If the policy is already in place then it should be very easy to get a copy of the declaration page or a copy of the policy.

OK,thanks again for the clarification.

I don't know what it is about Flood but it just seems so confusing to me.

Not to rehash this again...As per the General Rules section of the NFIP Flood Insurance Manual (revised May 2012) it states:

"Evidence of Insurance: A copy of the Flood Insurance Application and premium payment, or a copy of the declarations page, is sufficient evidence of proof of purchase for new policies. The NFIP does not recognize binders. However, for informational purposes only, the NFIP recognizes certificates or evidence of flood insurance, and similar forms, provided for renewal policies if the following information is included..."

In the case of a condo with an existing policy or a refi loan with an existing policy, these are not instances where there is a purchase of a NEW policy, therefore I just do not understand why the certificate of insurance would not be acceptable when making a loan in those scenarios.

Has anyone been criticized by an examiner for using a certificate of insurance as evidence (that included all the elements listed in the guidance) of existing flood insurance for a new loan on condo unit or refi?

I keep going back and forth in my mind on this one because I think the excerpt can be interpreted both ways. Right now I am hanging my hat on the fact that it is NOT A NEW NEW POLICY and the first half of the guidance is referring to purchasig a new policy.

I was going to ask a separate question on this subject but I will just piggy back to this..... we are making a loan with property in flood hazard area. So at closing/funding, all we need is the Flood Ins App and payment? Does it matter who makes the payment? Should the bank make payment and have customer reimburse? Or does this matter at all. Just want to be sure we have all the required documents in file at closing/funding !!
Advise.

Susane1 - my gut feeling would be that it would be unacceptable for the bank to make the payment and have customer reimburse - wouldn't that essentially be like force placing a policy?