Federal Flood Insurance Coverage and Mixed-Occupancy Condominium Associations

Article excerpt

Q. We have a borrower purchasing a non-residential condominium unit in a mixed-occupancy condominium building. The building is located in a Special Flood Hazard Area in a participating community and the association has purchased a blanket policy that covers both flood and earthquake disasters. The policy is for on adequate amount, but none of the coverage is specifically reserved for flood loss. Am I correct in thinking that the Federal Emergency Management Agency requires o policy with coverage specifically designated toward flood loss in an amount no less than the minimum required? (Note that the policy is not o Residential Condominium Building Association Policy.)

A. We spoke with a FEMA representative regarding your question. On page 58 of the Mandatory Purchase of Flood Insurance Guidelines regarding private insurance, it states:

"d. Breadth of Policy Coverage: The policy must guarantee that the flood insurance coverage, considering deductibles, exclusions, and conditions offered by the insurer, is at Least as broad as the coverage under the SFIP."

When accepting private insurance, you must ensure that the amount of coverage is adequate to meet FEMA's requirements. …

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