Question: Why is flood insurance needed in high-rise condo units? My residence is on the 30th floor of a condominium in Honolulu. This condo is in a special flood hazard area. Through our condo maintenance fee, we as owners already pay for flood insurance for the property. Our building is covered for more than 100 percent of replacement value. Yet my lender is telling me I need additional private flood insurance for my high-rise unit due to FEMA regulations. My question is, Why am I required to carry so much flood insurance when I live in a high-rise condo unit? Neither FEMA nor NFIP has explained to me why high-rises need additional flood insurance in the first place. The entire condo structure would have to collapse as a result of flood conditions for my 30th-floor unit to get flooded. The first few floors might get flooded, but not the 30th floor. At one point I canceled my additional flood insurance and was warned in a letter from FEMA to get a new policy. Then my insurance company force-placed a ridiculous $5,000-a-year flood policy on me.

Answer: First, a definition of terms. FEMA is the the Federal Emergency Management Agency, which coordinates the response to disasters beyond the scope of local or state authorities. NFIP, the National Flood Insurance Program managed by FEMA, provides flood insurance, maps flood hazard zones and seeks to improve flood-plain management.

To answer your questions, we contacted William Nhieu, a communications officer for the state Department of Commerce and Consumer affairs, which has an insurance division and an office of consumer protection. He said your inquiry overlapped several authorities, including the DCCA, FEMA and the state Department of Land and Natural Resources. He directed the query to Carol Tyau-Beam, Hawaii’s NFIP coordinator, who is based in the DLNR’s engineering division. She provided this thorough response:

“Any structure secured by a loan from federally regulated lenders which is located in a Special Flood Hazard area (A or V zones) must have flood insurance as required under the U.S. Flood Disaster Protection Act. This includes condominiums/high-rise structures. Flood insurance is important for condominiums/high-rise structures to protect the common elements damaged from flooding. If the common elements are not protected, most importantly the foundation, the entire structure is at risk and this could affect everyone in the building.

“When an Association of Apartment Owners is not properly flood-insured, the lender will likely require the individual unit owner (regardless whether the unit is well above the Base Flood Elevation) to obtain additional flood insurance coverage to make up the gap. FEMA has a co-insurance penalty when the RCBAP (Residential Condominium Building Association Policy) is not 80 percent or more of the full replacement cost of the building. Because of this, most lenders will require an individual unit owner to purchase additional coverage when the RCBAP doesn’t reflect coverage for 100 percent of replacement cost. It’s important that the AOAO review their flood coverage annually to ensure the building is properly flood-insured.

“As for the specific inquiry, I suggest the unit owner inquire with their lender as to what is triggering the requirement for excess flood insurance and provide documentation to prove that the condo master policy has flood insurance coverage for 100 percent of replacement cost of the entire building. It may be that the structure is covered for 100 percent of replacement value under the standard property coverage, but not for the flood insurance coverage. In that case, the lender may require gap coverage for flood.”

For more information about flood insurance for condominiums, see 808ne.ws/condoflood, a section of the NFIP website floodsmart.gov.

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