501.02A

Minimum Coverage Amounts

Requirements

You must ensure:

  • each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). has property insurance throughout the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. term;
  • the coverage is:
    • written on a Special Causes of Loss Form, or its equivalent; and
    • at least
      • 100% of estimated insurable value for a single-building PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , and
      • 90% of estimated insurable value for a multiple-building PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ;
    • if a blanket policy has scheduled limits per building, each building is insured to 100% of the estimated insurable value; and
    • coinsurance does not exceed 90% on any coverage. 

The maximum deductible:

If the insurable value is...

The maximum deductible amount per occurrence is...

Less than $5 million

$25,000

Equal to or greater than $5 million, but less than $50 million

$50,000

Equal to or greater than $50 million, but less than $100 million

$100,000

Equal to or greater than $100 million

$250,000

Guidance

100% coinsurance with the Agreed Value endorsement is acceptable.  Renewal of the Agreed Value endorsement

  • is not automatic, and
  • must be confirmed at each renewal.

You should:

  • assess the Borrower’sBorrower’sPerson who is the obligor per the Note. ability to pay any deductible, even compliant ones:
    • before accepting any deductibles; and
    • throughout the policy term;
  • determine the high deductible financial exposure by considering total out of pocket expenses rather than only the difference between the
    • maximum allowable deductible, and
    • requested/actual deductible; and
  • if insurance coverage is provided on a management company’s or unrelated entities’ master property program, then only use the Borrower’sBorrower’sPerson who is the obligor per the Note. owned or related properties to determine the maximum deductible.

A margin clause:

  • should not be used to determine compliant property insurance limits; and
  • may contain provisions limiting additional coverage availability.