What does my condo flood insurance policy cover?

What does my condo flood insurance policy cover?

| October 12, 2020

FEMA's special policy for condominium buildings

Did you know FEMA created a special flood insurance policy for residential condominiums? It's called the RCBAP, or Residential Condominium Building Association Policy. It is designed to cover residential condominium buildings in the Regular flood program.

Advantages of the RCBAP are

  • Covers entire building under one policy
  • One deductible for a building 
  • Higher limits available 
  • Provides replacement cost loss for buildings

The RCBAP policy form can be viewed here.

What items are covered under the RCBAP?

The RCBAP policy extends coverage to

  • Building
  • Common areas
  • Unit, including drywall, cabinets, ceilings, fixtures, appliances and flooring.

This differs from the way a typical hazard, or homeowners policy covers the condominium building. For hazard policies, a policy usually covers the structure and common areas, and may or may not extend to the unit, depending on what the condominium Master Deed says. This is an important difference to understand when determining the amount of flood insurance that should be carried.

How much coverage is available?

The RCBAP allows a condominium association to purchase coverage for the up to $250,000 per unit not exceeding the replacement cost. So a 2-unit condo can purchase a policy with up to a $500,000 building limit, a 10-unit condo can purchase up to $2,500,000 etc. 

What if this limit is not sufficient to replace everything covered by the policy? An excess flood insurance policy can be purchased to add more coverage. Also consider a private market flood insurance policy. These policies have coverage similar to the FEMA flood policy but many times will insure up to the full replacement cost of the building. 

Replacement Cost Value (RCV) 

The RCBAP covers the insured property for replacement cost value (RCV). The RCV is not the same as market value.  Replacement cost is the current cost to repair or replace the insured property with similar quality materials.  The RCBAP requires that a policy insure to value and must cover at least 80% of the RCV or the maximum available under the FEMA policy. If not properly insured to value at the time of a loss, a co-insurance penalty will be applied, and the insured will not be reimbursed fully for a loss. 

Do I need a unit policy too?

A unit owner can purchase an individual flood policy that will cover personal contents in the unit, including clothes, TV, furniture and basically anything that isn't nailed down. Think of turning your unit upside. Whatever falls out is contents. Please note a unit-owner HO6 homeowners policy does not cover flood damage, so an individual flood unit policy should be an important part of your insurance program. 

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