Property Insurance Requirements and Responsibilities for Florida’s Condominium Associations

The insurance requirements for condo associations and their unit owners have been codified by the Florida legislature within Section 718.111(11), Florida Statutes.  What is important for interested parties to know is that the current Florida Statutes are controlling on the issue of property insurance requirements, regardless of what is contained within a condominium’s declaration or when it was recorded.  In fact, the statute’s first sentence explains that, “this subsection applies to every residential condominium in the state, regardless of the date of its declaration of condominium.”  Fla. Stat. § 718.111(11) (2013).  Section 718.111(11), Florida Statutes, was amended in 2013, and this blog post is to provide interested parties with a high-level overview of the current insurance requirements of Florida’s condominiums and their unit owners.

What is considered adequate property insurance must be based on the replacement cost of the property, which is to be determined by an independent insurance appraisal.  Fla. Stat. § 718.111(11)(a) (2013). An appraisal, or a revised and updated prior appraisal, to determine the replacement cost must be performed at least once every 36 months.  Id.  As far as deductibles go, the association’s board may determine the deductibles set within the policies; however, “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.”  Fla. Stat. § 718.111(11)(c)(1) (2013).  The board may determine the deductible based upon available funds, including reserve accounts, or predetermined assessment authority at the time the insurance is obtained, and this determination must be made at a meeting scheduled in accordance with Section 718.112(2)(e).  Fla. Stat. § 718.111(11)(c)(2) (2013).

For insurance policies issued or renewed after January 1, 2009, the policies must provide primary coverage for all portions of the property as originally installed in accordance with the original plans and specifications.  The replacement materials used under the policy can be of like kind and quality.  Fla. Stat. § 718.111(f)(1) (2013).  The primary coverage must also include any alterations or additions made to the property pursuant to Section 718.113(2).  The coverage must exclude all personal property within the unit or limited common elements because such property and any insurance thereupon is the responsibility of the unit owner.  Fla. Stat. § 718.111(f)(3) (2013).  Insurance on the following items is also considered the responsibility of the unit owner and not the association:  “floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any [such items] which are located within the boundaries of the unit and serve only the unit.”  Id.

The Florida Statutes also clarify that unit owners are responsible for the cost of reconstruction of any portions of the condominium property for which the unit owner is required to carry property insurance.  Fla. Stat. § 718.111(11)(g)(2) (2013).  If the association incurs the cost of any such reconstruction, that amount is then chargeable to the unit owner and enforceable as an assessment.  Id.  On the other hand, if any portion of the property that the association is responsible for insuring is damaged by an insurable event, that property shall be reconstructed, repaired, or replaced by the association as a common expense.  Fla. Stat. § 718.111(11)(j) (2013).  With only a few limited exceptions outlined in the statute, all deductibles, uninsured losses, and other damages in excess of the association’s insurance coverage are to be a common expense of the condominium as well.  Id.  It should be noted that the association’s responsibility to repair the property it insures is only for damage caused by an insurable event.  Id.  The association should also keep in mind that it is not obligated to pay for any reconstruction or repair expenses due to property loss to improvements installed by unit owners or by the developer if the damaged item benefited only the specific unit and was not part of a standard improvement on all units.  Fla. Stat. § 718.111(11)(n) (2013).