Florida Self Insurance discussion

Bob,
I am no fan of Insurance companies. As a matter of fact, I dislike them more than most. Self-insurance is a Terrible idea. The only analogy I can come up with quickly is it is like selling a Life insurance policy to 1 person. They are going to die and without warning and you will pay. Living in Florida it is only a matter of time before an event happens. When it does the HOA will be bankrupt and the board will probably be sued for this terrible idea. The cost of the Insurance is spread across all the owners as it should be. It is not the boards' fault rates are going up. It is the cost of living in Florida after many terrible storms. I live in Texas, and we have had several Ice, Wind and freezes in the last few years. Our rates have also risen sharply. It happens.

I get it that rates are completely out of line across the board but trying to save dollars annually in the hopes of missing the next disaster if a really dangerous choice to make.

Our community is in Fort Myers and we certainly did have more than enough damage to meet our deductible- over $500k between damage and cleanup. Just got an offer from the insurance company to settle the claim for $59k (we’ve hired an attorney) so I know where you are coming from but self- insurance is a bad idea.

First, how are your finances? You were lucky this time. What about next time? How’s your reserves? You can’t use that money legally for hurricane cleanup. So are you just planning on a special assessment when you have damage? Or are you going to raise your fees to build a fund? The money has to come from somewhere.

Insurance premium increases are a planned, budgetable expense. Easy to justify raising fees and owners understand. Special assessments are not popular. And multiple special assessments over a few years is not a good thing.

Finally, I believe FS 728 requires a condo association to have adequate replacement cost insurance. So you can’t self insure a condo association. I don’t think HOAs have that requirement under FS 720. However, our declaration does require property insurance.

Most likely you can’t self insure.

Thanks Mark, I'm not sure that I said we're thinking of self insuring for "wind damage" only. Our current, post Ian, policy has a 5 million deductible for wind. Hurricane Ian was a Cat 4 and we had less than half mil in wind damage. So 5 mil in damage seems unlikely.

Around here, the association needs to provide proof of insurance or no mortgage. Its possible if you self insure, no bank will ever offer a loan to a buyer. Banks can also demand payment in full on current mortgages, or face foreclosure or ts common for a bank to buy insurance for you and charge you for it. this rate is far higher than what you would get on your own.

no bank wants to take back a hurricane destroyed property that is worth less than the amount owed.