R.M. from New Haven County writes:
Dear Mister Condo,
We were not in a flood zone a few years ago but the maps were changed. About half the owners don’t want flood insurance and half do. Are we obligated to get flood insurance for all?
Mister Condo replies:
R.M., welcome to the post-Katrina world of FEMA flood zone mapping! Your community is not alone in finding itself in this predicament. It is an issue all across the country as it is not just shoreline condominiums that have been affected. Community associations with rivers, streams, ponds – any kind of nearby water – are finding themselves with a new flood zone designation courtesy of FEMA, the agency that was tasked by Congress to remap and rezone the country in the wake of the devastating losses incurred during Hurricane Katrina and subsequent storms of similar consequence.
In our state, the community association is required to provide adequate insurance for all common elements. Traditionally, that meant a Master Policy that would cover the amount of the value of the buildings and common elements that were owned by the Association. Flood insurance is a bit of a grey area when it comes to “required” insurance. I have not seen it decided by a court yet but I would think the argument to require it is as simple as showing that the federal government has deemed the property likely to flood by designating it a Special Flood Hazard Area (SFHA). As such, the association should provide the insurance as required under state law. There is also a practical reason for the association to do so. Mortgage companies will require flood insurance for any property seeking a mortgage within a SFHA. It is very likely less expensive for the association to purchase this insurance for the entire association than it would be for individual members of the community to purchase their own policy. Of course, the argument against having the association pay for the flood insurance is usually from those folks who do not carry a mortgage. They are not under any pressure from a mortgage company to carry flood insurance so they would like to avoid the expense and not pay for insurance that may be required for their neighbors but not for them.
My advice is to have your Board and unit owners within the association discuss the issue. Find out how many individual unit owners are required to maintain flood insurance and see if there isn’t a consensus on having the association purchase the insurance for all unit owners. Purchasing the flood insurance certainly is in line with the spirit of the state law and may be an item that is already being purchased by a majority of the unit owners already. The association may actually be able to save money for individual unit owners by purchasing the insurance as an association. Even the unit owner’s who do not carry mortgages will benefit from the coverage as extra protection in the event that FEMA’s classification of “likely to flood” ever comes true. All the best!