Insurance Requirements for Condominium Projects, Townhouses and PUD's

Hazard Insurance

  • The hazard insurance coverage must cover 100% replacement cost of all common elements, fixtures, machinery, equipment, supplies, improvements and alterations within the individual units


  • The master policy must cover only the project containing the individual unit. A policy covering multiple unassociated projects is not acceptable


  • If the HOA master hazard policy does not include coverage for fixtures, improvements, equipment and alterations in the individual unit, the borrower must have an individual hazard insurance policy with HO-6 (walls-in) coverage


  • Hazard insurance deductible must not exceed 5% 


Flood Insurance

  • The HOA must maintain a Residential Condominium Building Association policy written to the National Flood Insurance Program (NFIP) standards
  • Coverage must be equal the lesser of
  • 100% of the replacement cost of each insured building including common elements and amenities, building equipment and machinery and 100% of insurable value or replacement cost of contents owned in common by the HOA
  • The maximum coverage available under NFIP, currently capped at $250,000 per unit