Individual Flood Insurance paid by HOA

Started by HenryZ1 • 7 replies • 3116 views

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HenryZ1 (Florida)
Posts: 4

Posted:

Florida HOA: Some members of our board are arguing to have the HOA pay the "individual" flood insurance premiums for unit owners. This is due to the new FEMA regulations no longer allowing the HOA to insure buildings. We have 36 resident units that we insured under the old FEMA laws. Can the HOA use it's funds to purchase an individual unit owners property? I am opposed to this as I believe the HOA cannot use its funds for this purpose. How can we force everyone to purchase insurance and how can we be guaranteed the check would come to the HOA in the event of a claim?
Ric

HenryZ1 (Florida)
Posts: 4

Posted:

Quote:

Posted By HenryZ1 on 06/23/2012 8:24 PM
Florida HOA: Some members of our board are arguing to have the HOA pay the "individual" flood insurance premiums for unit owners. This is due to the new FEMA regulations no longer allowing the HOA to insure buildings. We have 36 resident units that we insured under the old FEMA laws. Can the HOA use it's funds to purchase flood insurance on an individual unit owners property? I am opposed to this as I believe the HOA cannot use its funds for this purpose. How can we force everyone to purchase insurance and how can we be guaranteed the check would come to the HOA in the event of a claim?
Ric

TimB4 (Tennessee)
Posts: 21,059

Posted:

Henry,

Per Floodsmart.gov's web site there is flood insurance available for condo associations.

Can you provide a link to the new regulations that prevents the Association from insuring buildings?

Per the site I listed:

"The Residential Condominium Building Association Policy Form may be issued to condominium associations to insure eligible residential condominium buildings.

In participating NFIP Regular Program* communities only, provides building coverage and, if desired, coverage of commonly owned contents for residential condominium building with 75% or more of its total floor area in residential use.

*Regular Program- The final phase of a community's participation in the National Flood Insurance Program. In this phase, a Flood Insurance Rate Map is in effect and full limits of coverage are available under the Act."

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I am confused about why concerning about FEMA? FEMA steps in only after a natural disaster and compensates where insurance has left off. So one still has to carry their own insurance policy on their property as well as the HOA/Condo carrying their own. However, the HOA/Condo should carry only insurances directly effecting their property such as pools, clubhouses, and other amenities in regards to having flood insurance. I don't see why they have a responsibility to each individual homeowner to carry insurance. That is between the owner and their lender.

Now, there are areas that need to be deemed in a flood zone which FEMA may have drafted up. I know in our HOA and area, flood insurance was really only offered or required by those living in a 100 year plain area. Our HOA was not situated in one although we experienced flooding. Our flooding was to 2 houses on a regular basis due to bad engineering of drainage from the above subdivision. Hence, after the last major flood these homes were allowed to be qualified for flood insurance while the other homes could be exempt from it. One would have to apply and be approved for them to go to their insurer to add this insurance on. The HOA wasn't responsible.

I am sure if someone gets flooded and don't have the flood insurance they will come to the HOA begging for money and blowing smoke that it's the HOA's responsibility. It really isn't unless the HOA owns that individual's home and pays for their insurance policy. Flood, earthquake, and other factors are OPTIONS in may states and thus the individual's choice to add it onto their insurance if they want. If they don't have it, then that is the risk they take...End of story....

Former HOA President

HenryZ1 (Florida)
Posts: 4

Posted:

Tim: This a HOA which is treated differently then a condo assn.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Henry,

Now I'm confused.

Is your Association responsible for anything on the individual lot (exterior of building, roof, etc.)?

If not, then as I understand it, I don't see how the Association could buy any type of insurance for the property as the Association doesn't own an insurable interest in the property.

HenryZ1 (Florida)
Posts: 4

Posted:

We have nine buildings each with four two story townehouse units. The hoa is responsible for the exterior and as far as the interior drywall. Historically the HOA carried flood insurance on all of the buildings (9). FEMA will no longer insure each of the 9 buildings in the name of the HOA. Threrefore, flood is now the responsibility of the unit owner, of course those with mortgages are required to carry flood insurance (we are on a barrier island). Our covenants do not require the hoa to carry flood, only general liability and hurricane. However, some board members a pushing to have the hoa pay for flood on each individual unit (39) even though the insurance would be in the name of the unit owners; not the HOA.

1. I do not believe it is legal for the hoa to pay for an individuals insurance premium.
2. I do not see how the hoa can require a unit owner to carry flood insurance even if the hoa pays for the policy.
3. What assurance does the hoa have that the unit owner would repair the unit should they collect on their policy.

Has anyone had to deal with this type of issue with their HOA?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Henry,

Thanks for the info. What if you reorganize as a condominium? Would you then be allowed to purchase the insurance?

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