B7-3-04, Individual Property Insurance Requirements for a Unit in a Project Development (12/14/2022)

See Overview in  B7-3-03, Master Property Insurance Requirements for Project DevelopmentsB7-3-03, Master Property Insurance Requirements for Project Developments  for additional information.

See Determining if a Master Property Insurance Policy is Required in  B7-3-03, Master Property Insurance Requirements for Project DevelopmentsB7-3-03, Master Property Insurance Requirements for Project Developments for determining when a master property insurance policy and/or an individual property insurance policy is required.

See Coverage Requirements in  B7-3-02, Property Insurance Requirements for One-to Four-Unit PropertiesB7-3-02, Property Insurance Requirements for One-to Four-Unit Properties, for the coverage requirements when an individual property insurance policy is required for a unit in a project development.

See  B7-3-08, Mortgagee Clause, Named Insured, and Notice of Cancellation RequirementsB7-3-08, Mortgagee Clause, Named Insured, and Notice of Cancellation Requirements for requirements applicable to a loan secured by a unit in a project development.

To the extent the master property insurance policy does not cover the interior or improvements of a unit in a project development, the borrower must maintain an individual property insurance policy.

The lender or servicer must verify the coverage amount is sufficient to restore the unit to its condition prior to a loss event.

Coverage sufficiency should be based on the best information known or available to the lender or servicer, which may include information obtained from the borrower, in collaboration with the insurer, the HOA or co-op corporation legal documents, or other professional with appropriate resources to make such a determination.

Fannie Mae recommends that lenders and servicers encourage borrowers to closely collaborate with an insurance professional to determine their individual insurance needs.

See Deductible Requirements in  B7-3-02, Property Insurance Requirements for One-to Four-Unit PropertiesB7-3-02, Property Insurance Requirements for One-to Four-Unit Properties for deductible requirements when an individual property insurance policy is required for a unit in a project development.