Condo insurance and flood coverage is something that is commonly either misunderstood or overlooked. So, let’s delve a little deeper and chat about this question: How does the association provide flood coverage when the value of the building exceeds the $250,000 per unit/per building limit allowed in the Residential Condominium Building Association Policy (RCBAP)? Do unit owners need to, or can they, purchase real property coverage to make up the difference?
Let’s take this situation as an example: If there are 10 units in a building, the maximum coverage available under the RCBAP is $2,500,000. What must the association do if the structure’s replacement cost is $3,500,000? Does each unit owner need to purchase $100,000 real property coverage to make up the difference? Or does the association need to purchase $1,000,000 of excess flood?
Answer: If the Residential Condominium Building Association Policy is maxed out at $250,000 per unit, this is the maximum that will ever be paid out in the event of a loss to the building. The unit owners would not benefit from purchasing any extra building coverage. They should only purchase contents coverage. If additional coverage is needed, it is the responsibility of the association to purchase an excess policy to make up the difference.
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