Due to rising costs in material and labor, please be sure to review limits of insurance with your policyholders.


With the significant increase in construction costs over the past two years, it is particularly important to review limits of insurance with your policyholder. Policyholders with coverage written on the FP2 Broad Form contract are eligible for replacement cost loss settlement terms in accordance with policy terms and conditions.  The broad form contract contains a provision requiring insurance limits to be at least 80 percent of the calculated replacement cost of the building at the time of loss.  At the time of loss, if the limits are not adequate to meet this policy provision, the insured’s loss settlement will be penalized.  All FP2 policies carry an inflation guard endorsement which increases the dwelling and other structure limits by .5 percent quarterly and 2 percent annually.  However, in the current inflationary climate, this increase may not be enough to maintain sufficient limits of insurance.  While we do not undertake to determine the limit of insurance or value of the risk, as part of the continuation application process, updated replacement cost estimators that accurately reflect the characteristics of the home will be requested to confirm underwriting eligibility. Please refer to the Manual of Operations for FP2 eligibility requirements. Under no circumstances can the Association pay a claim in excess of the limit of liability shown on the Declarations Page.


A full copy of the FP2 contract and the Manual of Operations can be found at the link provided below or visit our website at