Understanding Insurance Requirements for Florida Condo Associations
In Florida, condo associations must have casualty insurance to cover property damage caused by “acts of God” such as hurricanes and floods. While master policies often vary by association, they typically cover everything outside the walls of each condo unit, including the building itself and guest injuries in common areas.
The Florida Condominium Act (Chapter 718, Florida Statutes) governs condo association operations and outlines insurance obligations. This ensures associations protect shared property and common areas while minimizing liability risks.
Mandatory Insurance Coverage for Florida Condo Associations
Property Insurance
Florida law requires condo associations to maintain property insurance covering:
- Common Elements: Includes lobbies, stairwells, pools, hallways, elevators, and parking areas.
- Building Structure: Covers exterior and structural components, including roofs and foundations.
- Bare Walls-In Coverage: Associations must insure everything up to the unfinished interior surfaces of individual units. Unit owners are responsible for interior features such as flooring, cabinetry, and appliances.
Key Consideration: Property insurance must cover “all-risk” events like fire, hurricanes, and vandalism unless explicitly excluded by the policy.
General Liability Insurance
Condo associations must maintain general liability insurance to cover the following:
- Injuries that occur in common areas.
- Property damage claims related to association-owned property.
This coverage protects the association against lawsuits and helps pay for medical expenses, legal fees, and settlements or judgments.
Windstorm and Hurricane Insurance
Given Florida’s susceptibility to hurricanes, condo associations must include windstorm insurance in their policies. This coverage ensures protection against damage caused by high winds, flying debris, and storms.
Key Consideration: Associations must ensure that their windstorm insurance complies with the state’s legal minimums and includes adequate coverage for all common areas.
Flood Insurance
Flooding is a common risk in Florida, and condo properties in FEMA-designated Special Flood Hazard Areas (SFHAs) are legally required to carry flood insurance. Due to the state’s vulnerability, flood insurance is strongly recommended even for properties outside these high-risk zones.
Where to Obtain Flood Insurance:
- Through the National Flood Insurance Program (NFIP).
- From private insurers offering supplemental flood coverage.
Even if not legally required, flood insurance is strongly recommended for condo properties in Florida due to the state’s high risk of flooding.
Fidelity Bond Insurance
Florida law requires condo associations to carry fidelity bond insurance, which provides financial protection against theft, fraud, or dishonesty by board members, officers, or employees who handle association funds. The coverage amount must equal or exceed the maximum funds in the association’s custody at any time.
Directors and Officers (D&O) Insurance
Although not explicitly required by Florida law, D&O insurance is essential for condo associations. It protects board members from personal liability for decisions made in their official capacity, such as:
- Budgeting and financial decisions
- Enforcing rules and regulations
- Hiring contractors or vendors
This coverage can help defend against lawsuits alleging breach of fiduciary duty or other governance issues.
What is Condo Insurance?
Florida law doesn’t require individual unit owners to buy condo insurance. However, if you have a mortgage, your lender may require you to have a certain amount of condo insurance as a condition of your loan. This coverage helps protect the lender’s financial interest in your property. Even if you don’t have a mortgage, your condo association may have rules about coverage for individual unit owners.
- Condo insurance, or HO-6 insurance: Is a specialized insurance policy designed to protect condominium owners from financial loss due to various perils. Unlike traditional homeowners insurance, which typically covers both the structure and the land, condo insurance focuses primarily on the interior structure of the unit and personal belongings. Since condo owners share common areas and building structures with other residents, the insurance coverage is tailored to address these unique circumstances.
Condo Coverage Essentials in Florida:
In Florida, condo insurance policies generally include the following essential coverages:
- Dwelling Coverage: This component protects the interior structure of your condo unit, including walls, ceilings, floors, and fixtures, from covered perils such as fire, vandalism, and water damage. In the event of damage, it typically covers repairs or reconstruction of your unit.
- Personal Property Coverage: Personal property coverage safeguards your belongings within the condo, such as furniture, electronics, clothing, and appliances. If your possessions are damaged or stolen due to covered events like theft or hurricanes, this coverage helps reimburse you for the cost of repair or replacement.
- Liability Coverage: Liability coverage is crucial for protecting you financially in case someone is injured while visiting your condo unit. It helps cover legal expenses, medical bills, and damages if you’re found responsible for causing bodily injury or property damage to others.
- Additional Living Expenses (ALE): If your condo becomes uninhabitable due to a covered loss, ALE coverage can help pay for temporary living expenses, such as hotel bills or meals, while your unit is being repaired.
- Additional Coverages: Depending on the insurance provider and policy specifics, additional coverages may be available to enhance protection. These may include coverage for improvements and betterments made to your unit, loss assessment coverage for shared building repairs or lawsuits, and umbrella liability coverage for extended liability protection.
When purchasing condo insurance in Florida, it’s essential to consider several factors to ensure adequate coverage:
- Building Master Policy: Condo associations typically carry a master insurance policy that covers common areas, building exteriors, and shared amenities. Understanding the association’s master policy is crucial for determining the extent of coverage needed for your unit.
- Hurricane and Flood Insurance: Given Florida’s susceptibility to hurricanes and floods, assessing whether your condo insurance policy includes adequate coverage for these perils is essential. In some cases, additional insurance may be necessary to fill gaps in protection.
- Personalization and Endorsements: Work with your insurance agent to tailor your condo insurance policy to your needs and preferences. To ensure comprehensive coverage, consider adding endorsements or riders for valuable items, such as jewelry or collectibles.
What Is Not Covered by Condo Insurance?
While condo insurance offers comprehensive coverage, there are certain events and items typically not covered:
- Building Structure: The exterior of the building, the roof, and common areas are usually covered by the condo association’s master policy, not your condo insurance policy.
- Flood Damage: Condo insurance policies typically do not cover damage caused by floods. You’ll need a separate flood insurance policy for this.
- Earthquake Damage: Standard condo insurance policies usually do not cover earthquake damage. If you live in an area prone to earthquakes, you may need to purchase additional coverage.
- Wear and Tear: Condo insurance is designed to cover sudden and accidental damage, not damage caused by normal wear and tear.
Florida-Specific Considerations
Due to Florida’s geography and climate, condo insurance policies may have some unique considerations. For example, hurricane insurance may be necessary, as Florida is prone to hurricanes. Reviewing your policy carefully and considering additional coverage options based on your location and condo association’s requirements is essential.
Conclusion
Insurance is a cornerstone of financial stability for Florida condo associations. By understanding the requirements and proactively addressing potential challenges, associations can safeguard their property and residents from the risks of Florida’s unique environment.
Need help with insurance compliance or claims? Our experienced insurance lawyers are here to guide you through the complexities of Florida condo association insurance. Call us at 1-800-451-6786 or fill out our online contact form.