Buyer Beware – Or Why Condominium Insurance Purchase Is Not The Same Any Longer

In CAM Library, Citizens Insurance, Commercial Market, Florida Hurricane Insurance, Florida Law Changes, Insurance Appraisal, Reserve Studies by Patricia Staebler

The recent decision in the 4th District Court of Appeals case “Citizens Property Insurance Corporation vs. River Manor Condominium Association Inc.” sheds new light on F.S. 718.111(11)(f).

Condominium association from now on should take extra care to know what property assets are included in their standard insurance policy and which are not.

The River Manor case is a great example and here is what happened:

Citizens insured this condominium association and excluded from the coverage “other structures set apart from the insured buildings by clear space such as carports, cabanas, swimming pools, Jacuzzis, piers, seawalls, decks, patios, etc.”

After Hurricane Wilma went through River Manor and left the association severely damaged the association and Citizens began to fight over the inclusion of the site improvements in the policy.

The argument driving the whole idea going forward with this claim was based on Florida Statute 718.111. River Manor claimed that Citizens’ exclusions conflict with section 718.111(11)(b) (Florida Statutes 2005) because the statute required insurers that issue condominium policies to provide coverage for all portions of the condominium property located outside the units and all portions of the condominium property for which the declaration of condominium requires coverage by the association. Based upon this conflict River Manor says the policy must be amended to delete the exclusions pursuant to the conformance clauses, which provide that “any terms of this policy which are in conflict with the statutes of the State wherein the property is located are amended to conform to such statutes…”

River Manor obviously won the first round in Trial Court; however on April 10, 2013 the 4th District Court of Appeals overruled this case with the following argument:

F.S. 718.111(11) was not intended to impose a mandatory insurance obligation upon carriers. It said that the statute is intended to regulate the insurance obligation of condominium associations by merely distinguishing what the association is responsible for covering versus what items the unit owners are responsible for and requiring associations to use their best efforts to obtain the best possible coverage. The court further stated that, “as its title suggests, the Condominium Act regulates condominiums and not insurance companies.”

And to say it with even more emphasis the court further stated that “In our view that statute was intended to impose upon condominium associations an obligation to use their best efforts to secure the designated coverage, implying that market forces in some instance may prevent this objective from being achieved.”

This means in plain English, that you will have to be extra, extra careful in the future when purchasing your condominium association coverage. You cannot rely on the assumption that insurance carriers will offer you a package, which will provide you coverage as described in F.S. 718.111(11).

If your site improvements are not covered in your standard policy and it is too expensive to purchase a separate insurance policy for these assets I recommend highly starting a reserve fund for self-insurance purposes.

As always, call or email me with your questions and thank you for reading my blog.


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