Do Condo Associations Need Flood Insurance? 

Flooding is one of the most financially disruptive property events a residential community can face. For condominium associations, flood insurance is not always straightforward. While standard property policies may address certain water-related incidents, they typically exclude flood damage. Understanding when and why separate flood insurance may be necessary can help associations evaluate their overall risk management strategy.

When Is Flood Insurance Required for a Condo Association?

Whether a condominium association needs flood insurance often depends on location and lender requirements. If a condominium building is located in a designated high-risk flood zone and carries a federally backed mortgage, flood insurance may be required. In these cases, lenders commonly require coverage for the building structure to protect their financial interest. It’s important to know how your condo association insurance works in times like these.

Even outside of high-risk zones, some associations choose to explore flood insurance due to localized drainage concerns, proximity to water sources or past flooding history. It’s important to note that a standard commercial property or master condo policy generally does not include coverage for rising water or storm surge. Associations that assume they are covered under their primary property policy may encounter unexpected coverage gaps following a flood-related loss.

How Flood Insurance Fits Into a Condo Association’s Risk Plan

Flood insurance for condominium associations typically applies to the building structure and commonly owned property. Coverage details vary depending on the policy type and insurer, but the intent is to address damage caused specifically by flood events, such as surface water accumulation or overflow from natural bodies of water.

For associations, evaluating flood exposure involves reviewing governing documents, understanding lender requirements and assessing the financial impact of potential repairs to shared structures. Associations should also consider how deductibles and coverage limits could affect reserve funds or special assessments if a flood occurs.

Because flood exposure varies significantly by region and building characteristics, working with an experienced insurance professional to review property details and policy structure is essential when determining appropriate coverage.

Learn More About Flood Insurance for Condo Associations

Condominium associations have unique insurance responsibilities that extend beyond individual unit owners. Contact Cormack-Routhier Agency, Inc. today to discuss flood insurance considerations for your association and to review whether additional coverage may be appropriate.