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.
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
- All portions of the condominium property located outside the
- 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
- 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
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.