Flood Insurance

Q: I’m just getting ready to close on a great condo that’s everything I ever wanted. It’s in an awesome neighborhood and the beach is right there when I walk out on the balcony. There’s also a very puzzling requirement that my lender has for a unit on the 16th floor. If there’s a flood that can hit the 16th floor, it’s safe to say that the world has ended and there’s nobody to call to file a claim. You guys had some really good reviews, can you help me?

A: Don’t worry! We get this one a lot. Flood insurance is a complex issue, and we’re here to walk you through it.

Your condominium is built in a high risk area, just by virtue of being a waterfront property. Your homeowners association already has a flood insurance policy called an RCBAP, which stands for Residential Condominium Building Association Policy. This covers the building, outbuildings like parking structures, common areas, and property owned in common, such as the furnishings of the clubhouse or fitness center. It also covers what makes a building a building, such as the foundations and systems like plumbing, electrical, HVAC that are on the other side of the drywall.

Now, that being said, everything else is your problem. The building’s policy does not cover your personal property. If you have a federally backed mortgage, you are required to carry flood insurance. You can get out of the requirement by switching to a lender who does not have federal backing, but this is a shortsighted move that can cost you in the event of all hell breaking loose. Insurance pays for damages, but federal aid that covers uninsured losses is a grant that has to be repaid.

In the event of a bad flood, your building may be uninhabitable or even too dangerous to enter. If an evacuation order is issued, and the area is a major disaster, it may be some time before you are allowed back in. In extreme cases, beach erosion can undermine foundations, and the roads might be entirely washed away. You may not be able to recover personal items or household goods. While we’ve been lucky to avoid major storms, Florida has a long history of acting as a hurricane highway, and many of the newer buildings – though built to code – have never been tested by a hurricane, or even a tropical storm. We’ve had a long lull, but it can’t last forever.

Now, before you think that insurance agents are all Gloomy Gus, it’s our job to consider the bad things that can happen and get you covered. There is insurance available to high-rise condominium owners, and you might not take that much of a hit. Come and see us, and we’ll get you the best coverage for your situation.