The condominium insurance market in Florida is, in a word, a mess. Naples, Marco Island, Bonita Springs, Estero, and Ft. Myers residents have had their share of problems getting and keeping their condominium insurance. Since Hurricane Andrew in 1992, major carriers like State Farm, Allstate, and Nationwide have cancelled thousands of long time homeowner, condo, and business insurance policyholders. In fact State Farm on February 1, 2010 began sending letters to 125,000 Florida policyholders notifying them that their insurance is being cancelled beginning in the summer or 2010.
As a full service independent insurance agency we represent a number of condominium insurance companies including Nationwide Insurance (renters), Bankers Insurance Group (homeowners, condo, dwelling fire), Tower Hill (homeowners, condo, dwelling fire), Citizens Insurance (homeowners, condo, dwelling fire), St. Johns Insurance Company (homeowners, condo), Olympus Insurance (homeowners, condo, dwelling fire), Universal Property & Casualty Insurance Company (Homeowners, condo, dwelling fire), Federated National Insurance (homeowners, condo, renters), and many more.
If your condominium insurance is being cancelled, if you are reviewing your current condominium policy's coverages and rates, or if you are new to the area and looking for a Naples insurance agent, please click here or give us a call!
What type of insurance do I need for my condo?
If you have purchased a condominium and you have a mortgage, the bank will require insurance to protect its investment in your home. You may, however, need more insurance to cover your personal items, liability or fees that may be charged to you regarding shared areas of the building like the lobby. Even if you don't have a mortgage you should carry insurance on your condominium to protect your property, your additions and alterations to your unit, for liability protection from being sued, and from accessment from you association from losses not covered by their insurance.
Your own insurance policy.
Called a condo unit owner policy or HO6, this policy provides coverage for your personal possessions, structural improvements to your apartment and additional living expenses if you are the victim of fire, theft or other disaster listed in your policy. You also get liability protection.
You should also consider the following additional coverages:
- Loss assessment: This reimburses you for your share of an assessment charged to all unit owners as a result of a covered loss. For instance, if there is a fire in the lobby, all the unit owners are charged the cost of repairing the loss. A minimum of $2,000 of loss assessment coverage is required by Florida law, you should consider purchasing more loss assessment coverage based upon your exposure at your unit.
- Water back-up: This insures your property for damage by the back-up of sewers or drains. Water back-up may not always be included in a policy. Check to see that it is included.
- Floater or endorsement: If you own expensive jewelry, furs or collectibles, you might consider getting additional coverage since there is generally a $1,000 to $2,000 limit for theft of jewelry on a standard policy.
These separate policies will provide you with additional protection:
- Umbrella liability: This is an inexpensive way to get more liability protection and broader coverage than is included in a standard condo/co-op policy.
- Flood: If you live in Florida you live in a flood zone. A condominium unit owner polcicy does not cover you for a loss due to flood. You need to purchase separate flood policy. Flood insurance is available through our office and is underwritten by FEMA's National Flood Insurance Program.
A "master policy" provided by the condominium board.
This covers the common areas you share with others in your building like the roof, basement, elevator, boiler and walkways for both liability and physical damage.
To adequately insure your condominium, it is important to know what structural parts of your home are covered by the condo/co-op association and what are not. You can do this by reading your association’s bylaws and/or proprietary lease. If you have questions, talk to your condo association, contact us, or family attorney.
Sometimes the association is responsible for insuring the individual condominium units, as they were originally built, including standard fixtures. The individual owner, in this case, is only responsible for alterations to the original structure of the apartment, like remodeling the kitchen or bathtub. Sometimes this includes not only improvements you make, but those made by previous owners.
In other situations, the condominium association is responsible only for insuring the bare walls, floor and ceiling. The owner must insure kitchen cabinets, built-in appliances, plumbing, wiring, bathroom fixtures etc.
Also don’t forget to ask about all available discounts. You can reduce your rates by raising your deductibles and by installing a smoke and fire alarm system that rings at an outside service.
Condominium Insurance Changes for 2010: Senate Bill 1196
In the 2010 legislative session the Florida house and senate passed, Governor Crist signed into law Senate Bill 1196. SB 1196, came to be known as the “condominium glitch bill” because a major purpose of the bill was to correct inconsistencies in two previous bills, HB 601 passed in 2008 and SB 714 passed by the legislature in 2009 but vetoed by Governor Crist.
In 2008 HB 601 was passed to try to address, among other things, the problem that a large number of condo units were left in disrepair after the 2004-2005 hurricane season because the owners of those units did not carry adequate insurance to pay for the damage to their units caused by the storms. In some cases, it was months before these units were repaired, if at all. HB 601 mandated that condo owners carry insurance on their units, it required that the condominium association be listed as a “named insured” on the policy, and gave the association the right to purchase insurance on behalf and at the expense of the unit owner if they refused to purchase the insurance on their own. Each of these provisions have been removed from the current law – SB 1196.
Although well intentioned, there were many problems with HB 601 that the legislature tried to correct with SB 714 in 2009. SB 714 passed the Florida House and Senate but was vetoed by Governor Crist because of a provision in the law having to do with mandating fire sprinklers. The most recent attempt to correct the problems with HB 601 is SB 1196 which was passed in 2010 by the House and Senate and was signed into law by the governor. SB 1196 will take effect on July 1, 2010. It is important to note that SB 1196 applies only to residential condominiums as defined in Chapter 718. Insurance for non-residential condominiums are not addressed by this law.
Here are some of the important provisions regarding condominium insurance of SB 1196:
Mandatory unit owner insurance: SB 1196 removes the provision that the association must require unit owners to provide evidence of property insurance, it deletes the requirement that the association be an additional named insured on the unit owner policy, and it removes the provision that allows the association to “force place” insurance on a unit owner who fails to purchase coverage on their own. The association can however, amend its by-laws to require the unit owners to purchase property and liability coverage on their unit. A good condo board should require each owner to purchase insurance on their unit to protect all owners from the consequence of having multiple unrepaired units months or years after being damaged by an event like a hurricane.
Loss assessment coverage: All condominium unit owner policies issued or renewed on or after July 1, 2010 must include a minimum of $2,000 of property loss assessment coverage with a maximum $250 deductible for all assessments made as a result of the same direct loss to the property.
Amount of association insurance/deductible: The association is required to purchase “adequate property insurance” based upon an “independent insurance appraisal” which must be determined at least once every 36 months. It is up to the board to determine what is “adequate insurance” based upon the appraisal. The board must also determine the appropriate deductible after considering their available funds on hand and their assessment authority.
Property excluded/covered under the master association insurance policy: The master association insurance policy does not cover additions, alterations, and upgrades installed within the unit by the unit owner. It also excludes all personal property within the unit or limited common elements, floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built in cabinets and countertops, window treatments, including curtains, drapes, blinds, and hardware. The unit owner can cover this property under the additions and alterations coverage of their condominium unit owner policy.
Items such as originally installed drywall, windows, interior non-load bearing walls, doors, toilets, bath tubs, sinks, closet rods, HVAC equipment, and sliding glass doors remain the primary responsibility of the association.
HVAC equipment: Heating, ventilating, and air conditioning (HVAC) equipment is no longer excluded under the association master insurance policy. This includes air handlers, heat pumps, thermostats, compressors, and duct work whether located within the units or not. The determination of the amount of additional insurance needed to cover the HVAC equipment is the responsibility of the condominium board and the board can not “opt out” of insuring the HVAC equipment. Repair, replacement, and maintenance of HVAC equipment is not covered by the association master insurance policy.
This discussion was meant to be a summary of the provisions of SB 1196 from a condominium insurance point of view. It is not meant to be complete or as legal advice. For specific legal requirements and interpretation please consult with your condominium attorney.
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