Many state statutes and condominium bylaws require the purchase of reasonably available property insurance which covers all direct physical risks of loss on an extended and replacement cost basis. One issue I have heard associations and their insurance agents ask: “Is flood insurance reasonably available” so that it has to be insured.

This question was recently answered in Porter v. Beaverdam Run Condominium Association.1 The holding is significant:

[W]e conclude that the Association is obligated by the Declaration and the Condominium Act to maintain insurance against all risks of direct physical loss which are commonly insured against, to the extent that such insurance is reasonably available. We further conclude that flood is a risk of direct physical loss which is commonly insured against for residential buildings located in a FEMA-designated flood zone. Accordingly, we conclude that the Association has an obligation to provide flood insurance for the Community’s buildings located within the FEMA flood zone each year when such insurance is reasonably available.

Condominium associations should be very wary that some insurance agents could leave the Board and Association liable for uninsured or underinsured losses by selling cheap insurance. These agents compete on premium price and propose packages of insurance that do not include commonly available coverages, especially sufficient law and ordinance coverage, flood, and earthquake coverage.

Thought For The Day

“The quality, not the longevity, of one’s life is what is important.” 
—Martin Luther King, Jr.


1 Porter v. Beaverdam Run Condominium Association, No. COA17-793, 2018 WL 2011355 (N.C. App. May 1, 2018).

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