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We have a $500,000 flood insurance policy for a business condo building that covers two units. There are four units in the building, but our policy covers two units that our borrower owns. The borrower is a business. The loan amount is $500,000, and the value is $1,170,700. For a business condo, would the maximum available under the NFIP be $500,000 or $1,000,000 due to there being two units? In other words, what is the minimum amount required to meet FDPA compliance? Do we look at the two units separately or together?
The loan amount is $500,000. The maximum amount from FEMA is $1,000,000 (Two general policies at $500,000 each). The value of the improvements is $1,170,700.
To be in compliance you must obtain at least $500,000 in coverage, which is the loan amount. The maximum coverage you could obtain is $1,000,000, assuming each unit is worth at least $500,000.
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