Florida Condominium Insurance

Winter 2008 CSANews Issue 69  |  Posted date : Dec 23, 2008.Back to list

New Laws Take Effect January 1, 2009

If you are the owner of a condominium unit in the state of Florida, there are some new laws that will affect your property. These are laws that determine the amount of insurance coverage that your association must have, for which you pay through your monthly dues, and the amount of coverage that you must provide through your individual policies. The requirements are very specific and strict, and are mandated by laws passed by the government of Florida. These laws apply to all condominiums in the state of Florida, no matter when such buildings were built. The reference is to "adequate hazard insurance," and the amount shall be based upon the replacement cost of the property to be insured as determined by an independent insurance appraisal, or the updating of a prior appraisal. The full insurable value shall be determined at least every 36 months. Requirements apply to both the association and the individual owners.

THE ASSOCIATION or BOARD OF DIRECTORS
To begin, the association will have to have an appraisal completed by an independent insurance appraiser to determine the replacement cost of the whole condominium. As mentioned, this must be updated every 36 months. The board will then consider what deductible to have on the policy to be obtained, and the amount of such a deductible must be consistent with the amount of deductibles that prevail in the locale in which the condominium is located. Consideration of reserves held by the association can be a factor in setting the deductible.

A meeting of the board of directors to settle the deductible amount on the policy to be purchased must be open to all owners, and the notice of the meeting shall contain information as to the amount of the proposed deductible and the basis upon which it was determined. As well, the notice must state the potential amount that would be assessed against each unit owner. All policies issued or renewed after January 1, 2009 shall provide primary insurance for all portions of the condominium property, but shall exclude all personal property within units, floor, wall and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and counter tops, window treatments (being curtains, drapes, blinds, hardware and similar window treatment components) or replacements of same.

The board of directors must also determine the amount of the deductible that will be allowed on the unit owners' insurance, and the amount of coverage to be obtained in the policy.

At least once a year, the association shall require each owner to provide evidence of a currently effective policy of hazard AND LIABILIT Y insurance. If the owner does not provide a certificate of insurance within 30 days of the request, the association may purchase a policy on behalf of an owner. The cost of same can be added as an assessment against the owner. As well, if there is not a policy and a loss is suffered, the association can repair the damage and charge the costs of same against the owner as an assessment, when there should have been insurance to cover the loss.

THE INDIVIDUAL OWNER OF A CONDOMINIUM
As mentioned, the owner must obtain a policy of hazard and liability insurance in an amount as determined by the board of directors, with a deductible no more than that as specified by the board of directors. The policy must also contain coverage for a special assessment of at least $2,000.00 per occurrence, and ensure that it provides excess coverage over the amount recovered under any other policy covering the same property. As well, the policy must cover all improvements and additions to the unit owner's individual unit. The policy should cover all those items excluded from coverage in the association policy. The policy has to name the association as an additional named insured and loss payee on the policy.

The first steps have to be taken by the association, as one will not know what is required until the appraisal has been completed and the association has informed the owners of the specifics of the insurance policy required.

However, it is wise to be knowledgeable of these requirements so that when demands are made upon you, an educated response can be given.