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DO YOU REALLY WANT TO RISK NOT HAVING INSURANCE?
By
Eric Glazer, Esq.
Published December 11, 2023
We all
know what the cost of insurance is doing to our way of life. In
most condominium associations, the cost of windstorm and peril
insurance has tripled over the past few years, if not
quintupled. And from what I am being told, there is no end in
sight. God forbid another major storm hits and the insurance
companies have to shell out another couple of billion. The cost
of insurance would go up even more.
Believe
it or not, I am being asked by more and more associations if it
is absolutely necessary for the building to be insured with
windstorm and peril insurance. The first place we need to start
is the Florida Statutes.
Florida Statute 718.111(11)(b) states:
(d) An
association controlled by unit owners operating as a residential
condominium shall use its best efforts to obtain and maintain
adequate property insurance to protect the association, the
association property, the common elements, and the condominium
property that must be insured by the association pursuant to
this subsection.
What in the world does “best efforts” mean? Does it mean that
if a policy is available at any price, the association must
purchase the insurance? Does it mean that if the cost of the
insurance is too high and will force residents into foreclosure,
the insurance does not have to be purchased? Nobody knows and
it is a terribly worded statute.
Let’s assume for the sake of discussion that we interpret the
above statute to allow the Board to refrain from purchasing
insurance if the cost is too high. We still have to look in the
community’s governing documents to determine if the docs require
that the association property is covered by windstorm
insurance. If the docs require it, then it shall be purchased.
Period. Many, if not most declarations do have a requirement
that the Board insure the property. Now what?
What would you do if you did not like a provision in your
governing documents? You would try to amend it. And that’s
exactly what some associations are doing and voting to remove
any requirement in the governing documents for the board to
purchase windstorm and peril insurance.
Is the move to go without windstorm insurance risky? Yes.
First of all it’s risky for the obvious reason…..if a storm
comes and destroys the place and you have no coverage, you would
have to use your own money to return the place to a livable
condition. The second reason it’s scary is because if anyone
has a mortgage, they would likely be in immediate default,
because the condominium property is not uninsured. The bank
may potentially either force place insurance or simply file a
foreclosure action. You would also never be able to sell your
unit to anyone requiring a mortgage.
It sounds crazy that in a hurricane prone state like Florida we
are even having a discussion about waiving insurance on our
condominiums, but I’m telling you now…..it’s happening. A lot.
The thinking is……..better to have an uninsured unit that no unit
at all.
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About
HOA & Condo Blog
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Eric Glazer graduated
from the University of Miami School of Law in 1992 after
receiving a B.A. from NYU. He has practiced community
association law for three decades and is the owner of
Glazer and Sachs, P.A. a five attorney law firm with
offices in Fort Lauderdale and Orlando.
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Eric is Board Certified by The Florida Bar in
Condominium and Planned Development Law.
Since 2009, Eric has been the host of Condo Craze
and HOAs, a weekly one hour radio show that airs at 11:00 a.m.
each Sunday on 850 WFTL.
See:
www.condocrazeandhoas.com.
Eric is the first attorney in the State of
Florida that designed a course that certifies condominium and
HOA residents as eligible to serve on a Board of Directors and
has now certified more than 20,000 Floridians all across the
state. He is certified as a Circuit Court Mediator by The
Florida Supreme Court and has mediated dozens of disputes
between associations and unit owners. Eric also devotes
significant time to advancing legislation in the best interest
of Florida community association members.
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