Condo Law Change Affects Insurance

2010 Legislative Session

A bill that took effect July 1, 2010 clarified property insurance requirements for condo owners and condo associations. Senate Bill 1196 fixed some confusing language by repealing a requirement for condo unit owners to have property insurance and a requirement that the condo associations buy it for them if owners didn’t buy coverage for themselves.  
In 2008, the Florida Legislature passed a sweeping condo law that addressed everything from insurance to eligibility of condo association board members. But some pieces of that bill (House Bill 601) needed tweaking – and that’s what this legislation did.
Now, condo unit owners are not required to carry property insurance on their unit. Some owners who do not have a mortgage decide to self-insure, because they feel they have enough equity in their units to pay for any damage themselves. Unit owners with a mortgage are required to have insurance coverage by their lender. What was confusing about the old law was that it had wording in it that directed the condo association to assess all unit owners to pay for insurance coverage for condo owners who did not want or need a policy, then collect the cost of the purchased insurance from the owner. This statutory language said associations “may” purchase policies; it did not say they “must” purchase it. Nonetheless, that confusion has been cleared up with the new provisions eliminating a requirement to obtain property insurance coverage for those without mortgages.

The law further states that condo unit owners who purchase property insurance must also obtain $2,000 of loss assessment coverage, and that the deductible on the assessment coverage may not exceed $250 per direct property loss.

The Florida Department of Business and Professional Regulation notes that the changes should help improve the financial position of condominium associations.