I’m not sure that factual questions is the right place - mods, please move if I’ve landed wrong.
So, I own a condo and the condo community is in a flood zone. The Association carries flood insurance for the structures. My condo owner’s policy is for the contents of my unit.
My mortgage company has recently audited my account and found that the Association’s flood policy has a deductible that’s too high ($25k) and the deductible has to be $10k or less.
I called my insurance company and the person I talked to seemed confused by what I was asking. Is there something specific I should be referring to when I talk to them next (the actual agent who deals with my accounts is supposed to call me back later)?
I don’t know the answer, but for others reading this post there was just a Wall Street Journal article related to the problem:
A Secret Mortgage Blacklist Is Leaving Homeowners Stuck With Unsellable Condos
Condominium owners across the country are facing a paralyzing problem: They can’t sell their properties because of a fast-growing and mostly secret mortgage blacklist…
The blacklist is maintained by Fannie Mae and includes condo associations that the mortgage finance giant thinks don’t have adequate property insurance or need to make critical building repairs. Being on the list can make it harder for potential buyers to get a mortgage.
According to lenders and real-estate agents, Fannie Mae greatly expanded the list after the Surfside condo collapse in Florida in 2021 killed 98 people. Compounding the problem, a nationwide insurance crisis is making it more expensive for condo associations to afford adequate coverage.
I am a former condo association president. And am familiar with the condo building insurance problems. Note that all condo & insurance regulation is by state, so my Florida experience may not be directly applicable to the OP’s situation in whichever unidentified state they live.
I have not encountered the exact issue the OP has. But I see a significant problem with solving it.
The OP as a unit owner does not have “an insurable interest” in the common areas. So they cannot buy insurance for it, period. Meanwhile, the common areas are the stuff the Association has insurance on and which insurance the unit owner’s mortgage company is now claiming is inadequate. This is a Catch-22: the OP cannot force the Association to rectify the coverage shortfall. Nor can the OP insure against it. The OP might be reduced to posting a cash bond for the difference ($15,000) to their mortgage company.
I’m no expert in this, so I might just be talking total nonsense, but I have bought insurance for a condo I own…
Your condo owners policy (maybe an HO6?) can have something called loss assessment coverage. The examples usually give are something like: a bus load of nuns slip and fall due to the HOA’s poor snow removal, and the resulting judgement is more than the HOA’s liability policy will cover, so each owner is assessed the difference. The loss assessment coverage on your personal insurance will cover this special assessment (certainly minus your own deductible).
Loss assessment coverage (or something with a similar name) can be expanded to cover deductibles that are passed on from the master policy.
I do not know if having your own personal insurance which will cover your share of the master policy’s deductible will satisfy the mortgage company.
If your insurance people can’t answer questions about loss assessment coverage, and what exactly it covers, and if a rider can be added to cover the flood insurance deductible, then you need new insurance people.
This would be my first recommendation. Find an independent agent (i.e., not one tied to a specific carrier) and ask them what you need. If they don’t know, keep looking until you find one. This is the value of people who know insurance and aren’t just salespeople.