CONDO 1

NOVEMBER 1, 2015

Important Notice to Agents/Producers:

Boards of directors of condominium associations typically are responsible under their by-laws for maintaining all

forms of property insurance necessary to protect the common property of the association against all hazards

to which that property is exposed for the insurable value/replacement cost of those common elements. This

responsibility would typically include providing adequate flood insurance protection for all common property

located in Special Flood Hazard Areas (SFHAs). Such by-law requirements could make the individual members of

the boards of directors of such associations personally liable for insurance errors or omissions, including those

relating to flood insurance.

CONDOMINIUMS

METHODS OF INSURING CONDOMINIUMS

There are 4 methods of insuring condominiums

under the National Flood Insurance Program (NFIP).

Each method has its own eligibility requirements for

condominium type. Only residential buildings having

a condominium form of ownership are eligible for

the Residential Condominium Building Association

Policy (RCBAP).

Residential Condominium: Association

Coverage on Building and Contents

A condominium association is the corporate entity

responsible for the management and operation of

a condominium. Membership is made up of the

condominium unit owners. A condominium association

may purchase insurance coverage on a residential

building and its contents under the RCBAP. The

RCBAP covers only a residential condominium building

in a Regular Program community. If the named insured

is listed as other than a condominium association,

the agent/producer must provide legal documentation

to confirm that the insured is a condominium

association.

(See

the

Eligibility

Requirements

subsection in this section.)

Residential Condominium: Unit Owner’s

Coverage on Building and Contents

A residential condominium unit in a high-rise or low-

rise building, including a townhouse or rowhouse,

is considered to be a single-family residence. An

individual dwelling unit in a condominium building may

be insured in any 1 of the following 4 ways:

1. An individual unit and its contents may be

separately insured under the Dwelling Form, in the

name of the unit owner, at the limits of insurance

for a single-family dwelling.

An individual unit may be separately insured under

the Dwelling Form, if purchased by the association

in the name of the unit owner and the association

as their interests may appear, up to the limits of

insurance for a single-family dwelling.

3. An individual unit owned by the association may

be separately insured under the Dwelling Form, if

purchased by the condominium association. The

single-family limits of insurance apply.

4. An individual non-residential unit owner may not

purchase building coverage. However, contents-

only coverage can be purchased either under

the General Property Form or the Dwelling Form,

depending on the type of contents.

A policy on a condominium unit will be issued naming

the unit owner and the association, as their interests

may appear. Coverage under a unit owner’s policy

applies first to the individually owned building elements

and improvements to the unit and then to the damage

of the building’s common elements that are the unit

owner’s responsibility.

In the event of a loss, the claim payment to an individual

unit owner may not exceed the maximum allowable in

the Program.

C. Non-Residential Condominium: Building

and Contents

Non-residential condominium buildings and their

commonly owned contents may be insured in the name

of the association under the General Property Form.

The “non-residential” limits apply.

D. Non-Residential Condominium: Unit Owner’s

Coverage (Contents)

The owner of a non-residential or residential

condominium unit within a non-residential condominium

building may purchase only contents coverage for that

unit. Building coverage may not be purchased in the

name of the unit owner.

In the event of a loss, up to 10% of the stated amount

of contents coverage can be applied to losses to

condominium interior walls, floors, and ceilings. The

10% is not an additional amount of insurance.