We have a condo construction loan secured by improved pads and certain finished condos. I am looking at the appraisal which lists a sales comparison "as is" value of $5 million on the 6 improved pads and an income approach "as is" of $5 million for the 6 improved pads and an income approach "as is" of $3 million on the finished condos The appraisal says it didn't do a cost approach because its not appropriate. I have no background in this type of loan and I don't know what to use as my flood insurable value. Should I be contacting our appraisal department for help? Thanks in advance.

Has the condo association actually been formed yet or not?

Well, the policy is in the name of the LLC - it doesn't say anything about an association. The 9 completed condos are building #7 and this policy is for building #7 only (I don't see any mention of the improved pads anywhere.) The policy says its a building occupancy type of Other Residential and the coverage total is $500,000. It says it's a private/alt market and the product type is marked Standard Policy. The policy form where you select dwelling form, general property form, or residential condo building association policy form is blank. With the total insurance amount of $500,000 isn't this a General Property Form? I'm confused because as I understand the eligibility of a General Property Form, this would either be a condo building with less than 75% of its floor area in residential use or a residential condo building in an emergency program community. I don't think the building is either.

If the condo association has not been formed, then the condo complex is not eligible for a RCBAP. You are stuck with "Other Residential" at $500,000 per building until the condo association is formed. It will be a business risk decision if this is deemed adequate and you are not going to also require a private umbrella policy until the condo association is formed. I'm not sure what an "improved pad" might be, but if that is anything beyond the slabs being poured, you need insurance on those. You will need building coverage on the rest of the project prior to advancing funds for further construction.

Thank you for your help. The flood policy also lists replacement cost of $1,500,000 for building #7 rather than the appraisal values I mentioned above.. Isn't that the value I should be using for insurable value in my calculations?

In the long run, most likely. With a $500,000 limit right now, it is sort of the moot point though.

We have a contractor building condos....a 4 unit condo and a 5 unit condo are in the flood zone....no association yet....

How are these insured during construction? Is each unit a max of 250,000 each meaning a max of $2,250,000 coverage OR until they are ready to sell is each "block of condos" $500,000 max?

After rereading what Randy wrote...

I think the 4 unit condo is insured for $250,000 and the 5 unit is insured for $500,000 until the association is formed....

Is this correct?