Will Florida homeowners insurance cover an Irma-related special assessment?

31 Oct
Florida Condo Insurance

Florida Condo Insurance and what is covered under an HO-6 condo policy. Location: Miami Style Condos,  South Beach Florida

Hurricane Irma did some major damage to the Sunshine State. According to the most recent estimates, the total for both insured and uninsured loss could be as high as $42 to $65 billion. This figure includes both residential and commercial property losses.

If you were unlucky enough to experience damage to your home, you probably have plenty of questions. This week we are looking at how to deal with damage issues related to condominiums and how your condo association may deal with the cost of repairs.

Damage to condominium (and there are lots of condos in Florida) buildings may present specific and confusing issues to both the unit owners in the building as well as the condo board. In this example, we will be assuming that a condo building lost part of its roof during the hurricane and now the board is issuing a special assessment to cover the cost.

While this may apply to condo buildings across the country, this article discusses law that is specific to Florida. If you live in another state, it will be necessary to consult a local attorney in regards to state law as well as your own condo association’s bylaws.

Assessment is an Option

Depending on the size of your association’s bank account, they may not be able to comfortably cover the cost of repairs. This leaves them with a couple of options, which include securing a line of credit or using a special assessment to cover the expenses.

While this may seem like bad news to you, especially if you can’t afford the assessment, there is a good chance that your insurance company may cover at least part of it. According to Florida law, section 718.111(11)(g) of the Florida Condominium Act, “a condominium unit owner policy must conform to the requirements of Section 627.714.”

Section 627.714 of the Florida Statutes states that all condo owner insurance policies, which are more commonly known as HO-6 policies, “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.”

All of that simply means that your insurance company should cover up to $2,000 of this particular special assessment as long as you are carrying an HO-6 policy, minus a $250 deductible. Basically, your condo board can issue an assessment and then have each unit owner recoup their portion by making a claim on their HO-6 policy.

The downside to this option is that your reimbursement will most likely be capped at $2,000 so if your portion of the assessment is above the $2,000 cap, you will be digging into your own pocket for the balance.

Another issue that could arise is that you or many of your fellow owners are not carrying an HO-6 insurance policy. In Florida, condominium owners are no longer required to carry an HO-6 policy by law although many associations still require it. If you are not carrying a policy, the cost of the entire assessment will fall to you.

In the end, your association can legally issue an assessment to help cover the cost of repairs due to the storm and unless you are carrying an HO-6 policy you will have to pay the entire assessment. If you do have an HO-6 policy you can file a claim in an effort to recoup up to $2,000 of the assessment cost.

HO-6 Policy Basics

An HO-6 policy is specifically designed for condos and co-op owners and will cover damage to the inside of your unit. This covers anything within the interior walls. These policies will also cover additional living expenses if your home is unlivable due to storm damage.

Additional living expenses include hotel bills, new clothing, eating at restaurants and other expenses that are related to the fact that you can no longer live in your home. As we have learned, an HO-6 policy will also help you cover the cost of an assessment if necessary.

HO-6 policies tend to be fairly affordable and while it may be tempting to go without the protection of a condo policy, this can be an expensive mistake. Unless you can easily afford to rebuild the interior of your condo and replace all of your possessions, as well as cover any resulting assessments you should have an HO-6 policy in place to protect you condo.

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