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Policy Issuance 7-95

November 15, 1995
Subject: Townhouse Eligibility for Residential Condominium Building Association Policies (RCBAP)

Background: Investigation of claims resulting from Hurricane Opal has revealed a problem which may exist throughout the country. Townhouse buildings not in the condominium form of ownership have been insured in the name of homeowners associations on RCBAPs. Such buildings are not eligible for coverage under the RCBAP.

Policy Statement: When such situations are discovered, the RCBAP may be considered as having a rating error and may be reformed to provide coverage on separate policies in the name of each townhouse owner under the provisions of Article 10.E.2., provided the conditions of the Rowhouses and Townhouses rule on pages GR 3 and GR 4 of the Flood Insurance Manual are met. When such rating errors are discovered at the time of a loss, any additional premium must be paid and the conversion to individual policies must be completed before the losses are paid. If reformation is not elected, the RCBAP will be nullified with a premium refund as a risk not eligible for coverage.

Last Modified: Wednesday, 11-Aug-2010 12:30:26 EDT