Condo Insurance Changes
LAST UPDATED: 27 October 2010

OCTOBER 27th, 2010: Article Submitted by: Marge Meek a local Sanibel-Captiva independent insurance agent.

After 2 years the state legislature has passed the condominium bill that has some significant changes that went into effect on July 1, 2010. The bill deals only with residential condominiums, not homeowners associations or non-residential condominiums, like office complexes that are organized like a condominium. Following is a synopsis of some of the more interesting rules that are included in the legislation.

Association insurance must be based on the replacement cost as determined by an appraisal, which needs to be done or updated at least every 36 months. This doesn’t mean that the association board must insure to 100 percent of the appraised value; the board can decide a lesser amount as long as they are within insurance guidelines. The board is responsible for selecting the deductible.

Heating, ventilating and air conditioning equipment is now included in the association master policy portion of property losses and the board cannot refuse to insure these items. The responsibility to maintain, replace or repair this equipment is not covered but probably is addressed in the condominium bylaws and documents. Items like, installed drywall, windows, interior non-load bearing walls, doors, toilets, bathtubs, sinks, closet rods and sliding glass doors remain the insurance responsibility of the association. Improvements that benefit the unit owner specifically need to be insured by the unit condo owner; for example, new interior walls or an enclosed balcony.

At least $2,000 of property loss assessment coverage does continue and it pertains to assessments triggered by a loss, not repairs or upkeep.

A piece of previous legislation that has been removed has to do with the requirement for the unit owner to carry insurance and provide proof by listing the association as additional insured on any unit policies. The statute caused a filing and compliance nightmare for the association and added burdensome requests to the insured and the insurance agent. No more, unless the association chooses to continue the practice.

There are a few more changes approved by the legislature that apply to condominiums. Stay tuned.

Marge Meek can be reached by calling 239-472-1152

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