We have a customer that has 3 buildings that are each 8-units. In reviewing the Biggert-Waters it says mutifamily structures are eligible for flood insurance up to the coverage amount of $500,000 per unit. The customer has building A & B insured for $498,000 but building C is insured for $530,000. This policy is written through a private insurer. Would there be a violation of over the $500,000 limit on building C or are buildings A&B underinsured and need to be written for $500,000?
The Biggert-Waters Act provides for coverage on multi-family dwellings in the amount of $500,000 per building, not $500,000 per unit. that is the maximum amount available from FEMA. A private policy is not subject to the Same limit. You may accept a private policy in lieu of a FEMA policy if the coverage is comparable to a FEMA policy.
To determine the amount of coverage required you must consider the amount of the loan, the maximum amount available, and the value of the improvements.