New Condo Insurance Law 2009

QUOTE
There is a new Florida law and it impacts your condominium policy!

Recently, the Florida legislature passed House Bill 601, which applies to all condominium policies issued or renewed after January 1, 2009. If you have condo insurance, this will affect your policy. If you do NOT have condo insurance, take note! You will want to get it on your own (to save money) or your condo association will have the ability to “force place” insurance just like a lienholder on your car has the ability to force placement on your car if you do not have insurance.

Increased Loss Assessment: The new law requires that your condominium policy provide special loss assessments coverage of at least $2,000. So, if your current policy has a limit of liability of less than $2,000 for Coverage G, Loss Assessments, most companies will automatically increase your limit to $2,000 effective on January 1, 2009, at no additional cost to you.

Condominium Association Treated as Named Insured/Loss Payee: In addition, in accordance with the new law, your condominium association will be treated as a named insured and loss payee for covered reconstruction costs related to any condominium property that the unit owner is required to insure. This change does not increase your policy’s coverage. It simply means that the condominium association will be named, in addition to you, on any loss payments made under Coverage A, Building Property Protection, of your policy. This change does not provide the condominium association with the right to cancel your policy. They are listed as an Interested Party on your insurance in order to coordinate coverage in the event of a loss in which both parties are responsible.

Providing Evidence of Hazard and Liability Coverage: The new law also requires condominium unit owners to provide proof of hazard and liability insurance to the association. You only have to provide this evidence once a year. Your Policy Declarations and this letter should suffice as adequate proof of these coverage and your compliance with the new law. If you have any questions about how this will affect your insurance policy, or to have your condo association listed on your policy, please call your insurance agency. UNQUOTE

Actually, the Bill was passed last summer. I had heard about it but didn't make much of it 'cause I live in a HOA. There is nothing to panick since the legislature is seriously considering eliminating some requirements at its next regular session. In addition, condos might go back to the "old fashion way" where association's insurance policies covered a lot more as far as the interior of a condo unit. That was the case when I purchased my first villa in So. Florida many years ago.

To clarify the comments of the OP, there has been a law in place for several years requiring owners to maintain insurance. Additional language in statute became effective July, 2008, as well as changes that became law on Oct. 1, 2008. Also, many, many condos have had requirements for mandatory coverage and loss/payee provisions in their docs for years.

Insurance law is maze-like when it comes to condominiums and difficult to navigate, even for those within the industry. For those of us on the outside, it's best to seek clarification from a knowledgable source.

Here is an e-mail that I received last December from a Broward legislator. I haven’t seen that the bill has been filed yet, but is it sure to appear, whether than by bill or amendment, in the upcoming session.

From Rep. Bogdanoff:

This email will clarify the some of the confusion regarding condominium legislation that we passed during the 2008 Legislative Session requiring condo unit owners to carry insurance.

This law was first enacted in 2004 and has not changed. The change made during the 2008 session was only an enforcement mechanism for the previously passed requirements. Although it is up to the discretion of each association to determine whether they will enforce this requirement, most seem to be enforcing the 2004 law on the advice of counsel. Many legislative offices are receiving inquiries.

After discussions with several experts, I believe it may be time to repeal this provision, as it is clearly outlined in statute what each association must insure and what remains the responsibility of the unit owner. Prior to 2004, it was possible without this clarification that after a storm, the association may not have had the necessary funds to rebuild the building. However, it is important that all unit owners understand that if they do not purchase a policy and there is damage, the association is not obligated to repair or replace internal floors, walls, and ceilings. That responsibility will remain with the unit owner.

With that said, I have submitted language to Bill Drafting to repeal that provision of the law that is creating concern among the unit owners, and I look forward to working with you on this issue during the 2009 legislative session.

Representative Ellyn Bogdanoff
State Representative – District 91