Condo Association Flood Insurance

Updated: Jun 5

There are several methods of insuring condominiums of which many can provide substantial savings in cost. Be sure to work with a flood expert who is knowledgeable in the alternative low-cost flood insurance market in addition to the NFIP. See the last section of this article for details on the criterion for the best savings practices.

The Residential Condominium Building Association Policy Covers More Condominium Types

Condominium Associations, in a Regular Program community, can purchase flood insurance coverage on a residential building and its contents under a Residential Condominium Building Association Policy (RCBAP). In addition to providing coverage for residential condominium buildings without imposing the burden of purchasing individual policies for each unit, the RCBAP expands the eligibility requirements to include all types of residential condominium buildings owned by the association, including:

  • Garden apartment-type construction

  • Townhouses

  • Rowhouses

  • Single-family detached buildings owned by the associations

  • Fee interest timeshare buildings

The RCBAP Provides Greater Coverage for Less Premium

Building coverage is provided on a replacement cost basis. A co-insurance clause requires the condominium association to insure its building to at least 80 percent of the replacement cost value, in order to avoid uninsured losses. Cost-effective flood insurance protection is provided by insuring all units in a condominium building under a single policy requiring only one deductible, creating cost savings for unit owners.

Other Major Benefits

The Residential Condominium Building Association Policy is a master flood insurance policy issued to residential condominium associations. Subject to its conditions, limitations, and exclusions the RCBAP is designed to insure both common individually owned building elements. Coverage for commonly owned contents can also be purchased. The RCBAP:

Offers a high limit of coverage:

  • Building —Full replacement cost of the building.

  • Contents — $1,000,000 or the actual cash value, whichever is less.

  • Assists unit owners with mortgage insurance requirements.

  • Provides greater protection against liability issues to condominium associations and board members.

  • Allows condominium associations to comply with by-law property insurance requirements.

Unit Owners’ Coverage - Building and Contents

An individual dwelling unit in a condominium building, defined as a single-family residence, may also be insured under the Standard Flood Insurance Policy - Dwelling Form in one of three ways:

  • An individual unit and its contents may be separately insured by the unit owner.

  • An individual unit may be separately insured if the policy is purchased by the association in the name of the “owner of record, unit number and (name of) Association as their interests may appear.”

  • An individual unit owned by the association may be separately insured if the policy is purchased by the condominium association.

Unit owners need to be aware that, if for any reason a condominium association elects to discontinue its RCBAP, individual unit owners may be responsible for covering flood damage. That is why having flood insurance and proper coverage is important for all residents living in condominium buildings, including high-rise condominiums. It doesn’t matter if you live on the first, third, or tenth floor, every unit owner has an undivided interest in the common elements of the building and can be assessed for unpaid damages to common areas even if their own unit remains undamaged. Also, condominium by-laws require all unit owners to be assessed for uninsured damages to common areas of a building if damaged by a flood.

Saving on Flood Insurance

There are a couple things you can do to increase the chances of saving a substantial amount of money on flood insurance.

  1. Work with an agency, like Yep Insurance, who is experienced and has access to the entire private alternative flood insurance market place in addition to the NFIP. The private flood insurance market has extremely competitive pricing compared to the traditional NFIP. How can you determine if your agent has what it takes to save you money? Simply, ask your agent "How many flood insurers do you quote flood insurance through on a regular basis?" If the answer is anything less than 8, run! Unfortunately, a majority of insurance professionals in the industry today are unaware of the wide variety of alternative flood insurance options that are available. This is costing US consumers billions every year.

  2. Work with an agent who has the capabilities to negotiate flood insurance requirements when the property is a candidate. Very few insurance professionals are familiar with this process. Top flood experts will easily be able to identify when a property is a good candidate to challenge FEMA's ruling on the flood zone determination and communicate this potential to their client. Hint: Yep Insurance has successfully saved property owner more than $1 million in excessive flood insurance premiums in 2016 alone. Wink wink ;)

Case studies & results you can take to the bank

CLICK HERE if you want to save big on your flood premium for a Condo Association

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