Most condominium associations in special flood hazard areas purchase flood insurance for the association’s common elements, association property, and units. Unlike your normal HO-6 condo unit owner’s policy, the standard Flood Dwelling Policy provided by the National Flood Insurance Program covers each unit, including its floor coverings, wall coverings, ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built in cabinets & countertops, and window treatments.
Many unit owners therefore believe, there is no reason to purchase Building coverage. However, there are 3 important reasons it may be wise for you to consider Building coverage for your condo unit.
- Control of your own insurance
If the association decides to not continue coverage Flood coverage for the association (or forgets to pay the premium), the Flood damage could fall back on the unit owner. By purchasing Building coverage, you can control your own coverage.
- Loss Assessments for Association Under-Insurance
If your association insured their building for at least 80%, but not 100% of the total replacement cost of the building, the association can assess unit owners if there were to be a covered Flood loss. If you have Flood Building coverage, it could help pay for these possibly large assessments.
- Loss Assessments for Non-Covered Building
Condominiums often choose to retain the risk of non-residential buildings, such as a club house or recreation building. If these buildings were to suffer Flood loss, the association can assess unit owners and Flood Building coverage can help pay for these potential assessments.
Please note Building coverage will not pay out in the following loss assessment situations:
- Loss assessments due to association’s Flood deductible
- Loss assessments due to loss of association Personal Property
- Loss assessments if the association underinsured the buildings less than 80% of value
- Loss assessments if the association’s buildings are insured at the maximum coverage allowable by the NFIP ($250k times the number of units)
It’s also important to mention that the association has NO responsibility to cover your own personal property, including, furniture, electronics, clothing, and other miscellaneous items. Unit owners in all participating communities can purchase Contents coverage to protect their personal property from Flood loss. If a unit owner’s purchases only Personal Property coverage they can use up to 10% of the limit to cover building improvements which have been made or acquired in the unit.
If you have any questions about what coverage you need for your condo unit or association please contact Brian Ford, CPCU, MBA at BFord@InsuranceResourcesLLC.com or 727-345-0242.