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The condominium master policy written under the National Flood Insurance Program has been significantly overhauled, effective October 1, 1994. The policy is identified as "new" by the Federal Insurance Administration because of important coverage, eligibility and rules changes prompted by experience with the original CMP since its introduction in 1989.
The coverage changes are such that agents will want to discuss them with residential condominium associations that are presently their insureds. This is a notable opportunity for service that cements account relationships. Expanded eligibility opens the door to additional sales.
Changes in the revised CMP include:
* Building coverage on a replacement cost basis instead of actual cash value.
* A coinsurance clause, which will require the insured condominium association to share in a flood loss if the building is not insured to 80% of its replacement cost value at the time of loss. Assessment of unit owners for underinsurance will be minimized by compliance with the coinsurance clause.
* Availability for all residential condominium buildings, which are divided into two types: high-rise and low-rise.
A high-rise condominium building contains at least five units and has at least three floors. A low-rise condo building...