Associations and insurance agents often face the following question “are condo associations required to have flood insurance?" Generally, condo associations purchase flood insurance for the association's common elements in select flood hazard areas. The natural flood insurance program details a flood dwelling policy that covers any physical damage to insured property by a flood. This policy covers damages to areas like a property's floor coverings, wall coverings, and ceiling cladding, assuring a replacement. Aside from that, appliances, water heaters, water filters in the home, built-in cabinets, windows, and countertops are also covered under the flood insurance policy. However, several condo owners still assume it is not necessary to acquire building coverage. Nonetheless, there are many reasons it would be wise enough to consider a flood insurance or building coverage policy for the condo association, and flood insurance for condo owners can prove extremely beneficial. So, are condo associations required to have flood insurance? Here’s what you need to know:
Control of Your Insurance
Condo owners that don’t have their coverage realize that they’re heavily dependent on their association’s coverage. Hence, this means that any mishaps or problems with the association’s policy instantly fall on you. In this case, many condo owners discover that there are significant advantages to securing their insurance independently. When you own insurance, policies are in your name and you know exactly what you’re paying for. Unfortunately, if your association ever decides to withdraw their association from flood insurance coverage, the flood damage would fall back on the owner and you’ll be expected to pay for all losses. By purchasing a building coverage, the owner can control their coverage without stressing about it and avoiding any problems in case of unforeseen circumstances. Hence, condo owners should purchase flood insurance themselves.
Insurance Coverage for an Association
Insurance coverage is protection for condo owners in situations when they're held financially responsible for any physical destruction to the building's structure from a flood. For instance, a homeowner has their building insured for 80% but not 100% of the replacement cost. The association is imposing the homeowner to pay for the loss occurring due to a flood. Flood building coverage proves beneficial when the owner has lost insurance coverage added to their condo insurance policy and can avoid paying out-of-pocket expenses. Moreover, it protects condo owners from any further claims and helps pay for huge assessments. For non-residential buildings like recreational or clubhouses, associations could evaluate and impose the losses' potential assessments on the owner. If the owners have flood coverage insurance, flood building coverage helps the owner cover the loss.
Limitations of the Building Coverage
It's essential to note that flood coverage insurance may have some limitations and not pay out certain losses. Losses that insurance would pay for include: loss coverage due to the association's flood deductible loss of personal property loss coverage if the association underinsured the building Apart from that, the coverage insurance doesn't hold any responsibility for personal property like furniture, electronics, and other different items. Additionally, Banks won't loan money to any association in flood zones unless they retain a building flood insurance. This means they can't obtain emergency funds before they insure. Moreover, no perfect insurance solutions exist. Consult your attorney and insurance professionals to understand the laws' threats and rulings before choosing the right insurance for your association. Hence, condo associations should obtain flood insurance coverage to avoid any complications in the future.