Florida Statutes and Condominium Insurance

If you are a part of a condominium community, a portion of your monthly maintenance fees is put towards the corporation’s insurance premiums. It is important to review the adequacy of insurance on an annual basis to ensure your condominium is sufficiently covered in the event of a total loss. Too much insurance, and you are simply overpaying on your premiums. Too little, and you risk having to face major special assessments or levies after a loss.

Let’s zero in on what your legal obligations are to the amount of insurance needed for your condo corporation:

Under the Florida Statutes section 718.111 (11)

a) Adequate property insurance, regardless of any requirement in the declaration of condominium for coverage by the association for full insurable value, replacement cost, or similar coverage, must be based on the replacement cost of the property to be insured as determined by an independent insurance appraisal or update of a prior appraisal. The replacement cost must be determined at least once every 36 months.

The key word here is ‘replacement cost’, which can only be accurately determined by an independent insurance appraiser. It is important to note that it is your legal obligation to review the adequacy of your coverage at least once every 3 years.

What about deductible amounts?

As per the Florida Statutes:

a) Policies may include deductibles as determined by the board.

1. The deductibles must be consistent with industry standards and prevailing practice for communities of similar size and age, and having similar construction and facilities in the locale where the condominium property is situated.

2. The deductibles may be based upon available funds, including reserve accounts, or predetermined assessment authority at the time the insurance is obtained.

3. The board shall establish the amount of deductibles based upon the level of available funds and predetermined assessment authority at a meeting of the board in the manner set forth in in s. 718.112(2)(e).

Determining the right deductible amount can be a little trickier, however your insurance broker will be able to advise an appropriate amount based on the conditions listed above. Of course, your condominium’s risk profile must also be taken into account when setting the deductible limit.

We continue to be in a hard insurance market, where premiums are high and less carriers are willing to write the risk. The condo insurance market has transitioned from “How can I save money on insurance?” to “How can I minimize the rise of the rate of insurance?” and thus it is best that your condo be proactive and take the necessary steps to keep your rates as low as possible.

Whether you are securing a replacement cost appraisal, or placing property insurance, make sure you consult with accredited and experienced professionals. Don’t take a gamble on one of your largest personal assets, and ensure you are adequately protected in the event of a loss.