Monday, June 7, 2010

SB 1196 changes do not mean condominium owners can cancel their H0-6 policies!

Some people have lept to the conclusion that the recent changes in SB 1196 pertaining to individual condominium unit policies (also known as H0-6 policies) now means that condominium owners no longer have to carry individual policies on their units. That is not the case. The changes in 1196 removed the statuory enforcement mechanism which allowed associations for a very brief period of time to purchase or “force place” missing H0-6 policies by specially assessing owners for the costs of same but it did not remove the underlying requirement that owners insure the interiors of their units.

If anything, SB 1996 provides in greater detail what must be in individual condominium unit policies. Elsewhere in Section 718.111(11) of the Condominium Act, the responsibility of owners to insure their individual property is implicit. Of course, some associations have amended their governing documents over the years to provide their boards with the ability to require owners to properly insure their units. Now that the statutory authority to enforce owner insurance responsibility is no longer available, associations looking for the ability to require owner compliance in this regard, may wish to amend their governing documents.

In addition to removing the association’s ability to force place missing H0-6 insurance policies, SB 1196 removed the requirement that owners add the association as an additional insured and loss payee on their individual policies. I have copied and pasted below the new changes brought about by 1196 in this regard; lining through indicates language that was deleted and underlining indicates language that was added. Please be sure to speak with your association counsel about these changes and to start an educational campaign in your community should your owners be under the mistaken belief that they no longer have a statutory responsibility to insure their individual units.

SB 1196 created Section 5. Section 627.714, Florida Statutes to read:

(1) For policies issued or renewed on or after July 1, 2010, coverage under a unit owner’s residential property policy must include at least $2,000 in property loss assessment coverage for all assessments made as a result of the same direct loss to the property, regardless of the number of assessments, owned by all members of the association collectively if such loss is of the type of loss covered by the unit owner’s residential property insurance policy, to which a deductible of no more than $250 per direct property loss applies. If a deductible was or will be applied to other property loss sustained by the unit owner resulting from the same direct loss to the property, no deductible applies to the loss assessment coverage.

(2) The maximum amount of any unit owner’s loss assessment coverage that can be assessed for any loss shall be an amount equal to that unit owner’s loss assessment coverage limit in effect one day before the date of the occurrence. Any changes to the limits of a unit owner’s coverage for loss assessments made on or after the day before the date of the occurrence are not applicable to such loss.

3) Regardless of the number of assessments, an insurer providing loss assessment coverage to a unit owner is not required to pay more than an amount equal to that unit owner’s loss assessment coverage limit as a result of the same direct loss to property.

4) Every individual unit owner’s residential property policy must contain a provision stating that the coverage afforded by such policy is excess coverage over the amount recoverable under any other policy covering the same property.

The following is a portion from 718.111(11) discussing what is exempt from the association’s insurance coverage. It is also important to note that in a few places in 718.111(11), the language refers to unit owner requirement to carry property insurance (see highlighted section below).

3. The coverage shall exclude all personal property within the unit or limited common elements, and 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 of the foregoing which are located within the boundaries of the unit and serve only such unit. Such property and any insurance thereupon is the responsibility of the unit owner.

A condominium unit owner's policy must conform to the requirements of s. 627.714 Every hazard insurance policy issued or renewed on or after January 1, 2009, to an individual unit owner must contain a provision stating that the coverage afforded by such policy is excess coverage over the amount recoverable under any other policy covering the same property. Such policies must include special assessment coverage of no less than $2,000 per occurrence. An insurance policy issued to an individual unit owner providing such coverage does not provide rights of subrogation against the condominium association operating the condominium in which such individual is located.

1. All improvements or additions to the condominium property that benefit fewer than all unit owners shall be insured by the unit owner or owners having the use thereof, or may be insured by the association at the cost and expense of the unit owners having the use thereof.

2. The association shall require each owner to provide evidence of a currently effective policy of hazard and liability insurance upon request, but not more than once per year. Upon the failure of an owner to provide a certificate of insurance issued by an insurer approved to write such insurance in this state within 30 days after the date on which a written request is delivered, the association may purchase a policy of insurance on behalf of an owner. The cost of such a policy, together with reconstruction costs undertaken may be collected in the manner provided for the collection of assessments in s. 718.116.1.

3. All reconstruction work after a property
casualty loss must shall be undertaken by the association except as otherwise authorized in this section.

A unit owner may undertake reconstruction work on portions of the unit with the prior written consent of the board of administration. However, such work may be conditioned upon the approval of the repair methods, the qualifications of the proposed contractor, or the contract that is used for that purpose.

A unit owner must shall obtain all required governmental permits and approvals before prior to commencing reconstruction.

2.4. 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 casualty insurance, and any such reconstruction work undertaken by the association is shall be chargeable to the unit owner and enforceable as an assessment pursuant to s. 718.116. The association must be an additional named insured and loss payee on all casualty insurance policies issued to unit owners in the condominium operated by the association.


  1. Thank you. I think that settles what our corrupt board did after the 2004 storms...they made ONLY DAMAGED UNITS pay the deductible making my loss assessment coverage useless.

    This issue was presented to Rep. Robaina's Select Committee by me in 2008. Thank you for making this clear.
    Bob Palm Springs, Fl.

  2. Not true. The law only specifies the requirements that a policy must contain IF one is purchased. No requirement to purchase.

  3. Mark,
    I disagree. The new legislative changes took away an association's ability to force owners to purchase interior coverage statutorily. There are still associations out there with provisions in their governing documents that require owners to maintain such coverage or risk certain consequences. The statute clearly outlines what must be included in HO-6 policies and implies that such coverage is mandated. As a result, an argument can be made that the coverage is required and, again, certain association documents already require it. I think we both can agree that the wording of 718.111(11)is less than great.

  4. Thank you for your explanation of insurance changes as it applies to HO-6 policies. I have a question regarding Land Condominiums and the 2010 718.111 (11)(a)(3)(e) which stated:

    (e)The declaration of condominium as originally recorded, or as amended pursuant to procedures provided therein, may provide that condominium property consisting of freestanding buildings comprised of no more than one building in or on such unit need not be insured by the association if the declaration requires the unit owner to obtain adequate insurance for the condominium property. An association may also obtain and maintain liability insurance for directors and officers, insurance for the benefit of association employees, and flood insurance for common elements, association property, and units.

    I checked SB 1196 and there is no reference to this part. The subparts go from (d) to (f) at lines 458-464. Does this mean this is no longer in the statute? We have single family homes on our land units and we have HO-3 policies. We have been asking for proof of coverage. Can we no longer do this?
    Thank you.