What does condo flood insurance cover? 

If you own a condo building in Florida, you’ll want to consider purchasing a flood insurance policy. These policies are known as RCBAPs or Residential Condominium Building Association Policies, and they can be used to restore the building after a flood.

What is RCBAP Insurance?

RCBAP insurance is a flood insurance policy that FEMA created specifically for condo buildings. This policy helps ensure that condominiums are covered by the national flood insurance program. Prior to the creation of this policy, it was very difficult for HOAs to get coverage for the entire building’s structure.

Why is RCBAP insurance important?

Condos are a unique type of property. The residents own their individual units. However, they don’t own the hallways or public areas. Instead, they pay a fee so that the HOA can maintain those areas. This means that those residents can change anything within the walls of their unit and must take care of any maintenance issues that occur inside their units. However, the HOA is responsible for the common areas and the exterior of the building as well as any public garages, pool houses and external buildings that are used by the condo’s staff. This has, historically, made it very difficult for condo building owners to get adequate insurance for floods in a single policy.

What does RCBAP insurance cover?

RCBAP insurance policies are unique because they give HOAs the option to cover the entire building under a single policy with a single deductible. It also covers the entire replacement cost for any HOA-owned exterior buildings, and it gives the condo association the ability to choose higher limits for their policy.

  • Covers the Whole Condo Building – RCBAP insurance policies cover the entire structure of the building. This includes the exterior walls, doors, roof windows and the foundation. They also typically cover staircases, elevators, HVAC systems, water heaters, the electrical system, and wells on the property, water pumps and items that are permanently installed in the building. It also typically covers the walls of the units, flooring and drywall as well as the appliances that are inside each unit.
  • Covers the Common Areas – This policy covers all the common areas that are owned and managed by the HOA.
  • Offers Some Coverage for the Units – The policy does cover some of the parts of the individual units. Typically, this policy would help pay for the unit’s walls, drywall, floors, fixtures and appliances.

What condos are eligible for RCBAP insurance?

Condo buildings are eligible for RCBAP insurance if 75 percent of the building is for residential use. If more than 25 percent of the building includes commercial businesses and/or common areas, like pool houses, garages, storage buildings and clubhouses, it’s not eligible for RCBAP insurance.

How much RCBAP insurance does my condo building in Florida need?

RCBAP insurance policies give the HOA the ability to purchase up to $250,000 in coverage for each unit. This means that if the condo contains 75 units, the condo association can get a policy that covers $1,875,000 of damages.

RCBAP insurance policies also contain other stipulations. For example, the policy must cover at least 80 percent of the replacement cost value or RCV. It’s important to note that this is different than the market value of the building. The market value of a building is the estimated value of the asset for financial value. In order words, it’s the price an investor might be willing to pay to purchase the building. The RCV value of your building is the actual cost to replace or repair your building in order to bring it back to its pre-storm condition.

This means that if the replacement cost of your building is valued at 2.5 million, 80 percent would be two million. However, there are instances where the coverage limits don’t cover the entire replacement cost. In these instances, the building must be insured for the maximum allowable amount of the policy.

What type of flood insurance do the unit owners need?

It’s important to note that RCBAP insurance policies do not cover the individual unit owner’s personal belongings or anything that isn’t nailed down inside the unit. Therefore, even if the HOA has a flood insurance policy, the unit owners should purchase their own separate flood insurance policy that covers their personal items. Unit owners should also understand that their standard condo owners policy does not cover damage that is caused by floods. If they wish to be covered by flood events, they will need a separate flood insurance policy.

Can Fearnow help us get flood insurance in Florida?

If your HOA needs a flood insurance policy in order to financially protect the building in the event of a flood, Fearnow can help. We have access to RCBAP insurance policies, and we can help you figure out how much coverage you need. Additionally, if the replacement cost of your building is higher than the maximum limits of the RCBAP insurance policy, we can help you find supplemental flood insurance that can help fill the gap.

To learn more about our flood insurance policies for HOAs and unit owners, give us a call at 813-689-8878.