Expert Commentary

Florida Revisits Its Condominium Insurance Statute Once Again

A new Florida statute will affect hazard insurance policies issued to condominium associations with an effective date of January 1, 2004, and beyond.

Property Insurance
December 2003

Florida Statute § 718.111(11) sets forth the various insuring responsibilities between condominium unit owners and condominium associations in Florida. Since its enactment in 1978, its provisions have been the subject of no less than 21 amendments. During its 2003 session, the Florida Legislature again revisited and revised the statute addressing insurance coverage for condominium associations and condominium unit owners. In making its changes, the Legislature also continued its effort to prescribe, by statute, which items are covered by an insurance policy issued to a unit owner and which items are insured under the association's policy. The statute has been signed by Governor Jeb Bush and will impact policies issued and claims arising on and after January 1, 2004.

Historical Perspective

Since the inception of condominiums and insurance covering them, there has been ongoing confusion as to what items were covered under the association's policy and which items were covered under a unit owner's policy. The very earliest battles concerned the partition walls. After the Legislature resolved that issue, floor coverings and wall coverings became the next great battlefield, followed by built-in cabinets, water heaters, and air conditioners, among other items. Over the past 2 decades the Legislature modified the condominium statute numerous times in attempts to bring clarity to a confused area. Unfortunately, confusion continued through the years.

For example, in 1992 the law was changed so that floor and wall coverings were the responsibility of the insurer issuing a policy to the unit owner—unless the declaration of condominium existed prior to October 1, 1986, and that declaration required the association to insure floor coverings and wall coverings. The 1992 law sought to clarify responsibility for built-in cabinets and air conditioners, among other specified items. The 1992 version provided that these items were the responsibility of the insurer of the association, unless the association could show the unit owner had the responsibility to repair or replace those prescribed items, and that those items were "located within a unit."

For reasons which have been painfully apparent to those insuring and adjusting condominium claims, the Legislature's last attempt to resolve the bifurcated responsibilities of association and unit owner insurers fell noticeably short. The changes in 2003 are intended to draw clearer lines of responsibility and avoid confusion and to avoid needless litigation in the future. The intent of the legislative changes seems apparent. Hopefully, the long-anticipated practical and judicial clarity that is needed will soon be realized.

The 2003 Changes

In prior versions of the statute, the Legislature sought to allocate responsibility for coverage for certain items by defining the word "building" as it appeared in the policies of insurance issued to an association. The 2003 amendment moves away from tying the definition of the word "building" to insurance policies. Instead, the revised statute targets the meaning of "building" along with other terms as they may be found in an association's declaration of condominium. This results in defining what is to be considered "condominium property" and what is considered property of the unit owner for purposes of insurance.

The statute first details what a policy of insurance issued to the condominium association is required to insure. The 2003 statute states:

b. Every hazard insurance policy issued or renewed on or after January 1, 2004 to protect the condominium shall provide primary coverage for:

  1. All portions of the condominium property located outside the units;
  2. The condominium property located inside the units as such property was initially installed, or replacements thereof of like kind and quality and in accordance with the original plans and specifications or, if the original plans and specifications are not available, as they existed at the time the unit was initially conveyed; and
  3. All portions of the condominium property for which the declaration of condominium requires coverage by the association.

Standing alone, the above paragraphs, particularly paragraph 2, might lead the reader to conclude that wall coverings, floor coverings, and built-in cabinets and fixtures that were a part of the original unit as built would be covered under the association's policy. However, the language which follows these three paragraphs appears to shift that responsibility for those and other items to the unit owner's policy. The statutory language which immediately follows these three paragraphs states:

Anything to the contrary notwithstanding, the terms "condominium property," "building," "improvements," "insurable improvements," "common elements," "association property," or any other term found in the declaration of condominium which defines the scope of property or casualty insurance that a condominium association must obtain shall exclude all floor, wall, and ceiling coverings, electrical fixtures, appliances, air conditioner or heating equipment, 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 a unit and serve only one unit and all air conditioning compressors that service only an individual unit, whether or not located within the unit boundaries.

The operative phrase appears to be "condominium property." Paragraph 2 requires the policy issued to the association to insure "condominium property" as originally installed, etc. However, the trailing language quoted above clearly defines what is not to be considered "condominium property" as defined in the declaration of condominium for the purpose of insurance. Additionally, the statute sets forth the legislative intent within the statute itself where it states immediately after the portion quoted above:

The foregoing is intended to establish the property or casualty insuring responsibilities of the association and those of the individual unit owner and do not serve to broaden or extend the perils of coverage afforded by any insurance contact provided to the individual unit owner.

The bottom line appears to be that those items listed in the statute specifically stated not to be association property for insurance purposes should be covered under the unit owner's policy. Other additions or changes to the statute worth noting are the following.

  • The unit owner is no longer required to be considered as an additional insured under the association policy;
  • All real or personal property located within the boundaries of the unit owner's unit which is excluded from the association's policy is to be insured by the unit owner; (Note: the statute states "shall be insured by the unit owner." It would appear this clause was intended to clarify that such property would not be insured under the association's policy as opposed to mandating that a unit owner must purchase insurance for that unit.)
  • The statute states it is the intent to encourage lower and stable insurance premiums and the Legislature is requiring a report from the Office of Insurance Regulation 18 months from January 1, 2004 to determine the statute's impact;
  • The association is specifically permitted to include reasonable deductibles in its coverage;
  • The amended statute retains a provision that insurance provided to a unit owner is excess over any other insurance covering the same property and the unit owner has no rights of subrogation against the condominium association.

Additional Items To Consider

When will the claims process be impacted by the statute? The statute states it applies to association policies renewed or issued on or after January 1, 2004. Therefore, clearly, any loss occurring in 2004 after the renewal or issuance of a policy to the association should be settled using the guidelines set forth above.

What about a loss occurring in 2004, or in 2003, after passage of the statute but before the renewal or issuance of a policy to the association? The statute is silent on this issue. As reflected above, prior versions of the statute sought to answer questions about the adjustment of claims involving floor coverings, wall coverings, and built-in cabinets and other fixtures. The amended statute deleted the old language but is silent as to how losses are to be adjusted in the interim. Therefore, it would appear that those claims are to be adjusted in accordance with the prior law. However, care should be taken to note the comment below that if insurance coverage is provided which is broader than that required by a statute, the terms of the policy control.

What if the insurance policy provides broader coverage than required by the statute? The existing case authority suggests the terms of an insurance policy will control if the coverage provided by that policy exceeds what is mandated by the statute. The reverse, however, is not true. Thus, if a policy issued to an association provided coverage for floor coverings, the insured could argue with merit that the association's policy should respond. This would be true even though the condominium insurer, otherwise, would not be required to respond under the statute. One argument would be that under the old statute, the definition of the word "building" and what it includes and does not include, was directed at its use in the policy itself. Under the current amendment, the use of the word "building" does not modify an insurance policy but is directed at the way the term is used in the declaration of condominium. Therefore, underwriting departments and brokers may wish to review policy forms to make certain the association policies do not provide more coverage than is required and that the unit owner policies conform to the statute. Doing so should help promote the legislative intent to reduce premiums and align coverage, an intent expressed in the statute itself.

What if the insurance policy provides less coverage than required by the statute? The statute speaks to what is and is not condominium association property, and, therefore, what is and is not to be insured under the association's policy. This is accomplished by listing specific property which the association is not required to insure with the implication being that the unit owner's policy will cover such items. A controversy would arise if the unit owner's policy sought to exclude any of the enumerated list of property. Given what appears to be the legislative intent, underwriters and brokers should compare coverage provided under the unit owner's form and make changes as needed, as well as adjustments in premium, if needed.


The new statute is effective for hazard insurance policies issued to condominium associations as new or renewal policies with an effective date of January 1, 2004, and thereafter. For losses arising under those policies, it will no longer be necessary to consult declarations of condominium to determine items for which the association is obligated to provide coverage versus those that are the responsibility of the unit owner. The statute states that it is the intent of the Legislature to clarify the property intended to be covered under the association and the unit owner policies.

Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

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