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Bill aims to reduce condo insurance costs by allowing cash-value roof coverage

Large condominium complexes have been hit hard by the ongoing insurance crisis.
 
Homes and condominiums damaged by Hurricane Ian in Fort Myers Beach, Fla., Feb. 9, 2023.
Homes and condominiums damaged by Hurricane Ian in Fort Myers Beach, Fla., Feb. 9, 2023. [ SCOTT MCINTYRE | South Florida Sun-Sentinel ]
Published Dec. 11, 2023

Windstorm insurance coverage would become more affordable and more widely available for Florida’s condominium buildings if a pair of bills recently filed with the Florida Legislature become law.

The bills would create a pilot program requiring state-owned Citizens Property Insurance Corp. to cover roofs of condo buildings at actual cash — also known as depreciated — value rather than at full replacement cost.

The bill’s sponsors hope the program, which would be created by the Office of Insurance Regulation, will eliminate situations like what Rick Engles encountered when he made a deal to sell his late mother’s condo unit in Sunrise Lakes Phase 4 this past summer.

The buyer’s lender declined to offer a mortgage loan after learning that the condo association’s insurer had canceled its windstorm insurance during the middle of the just-completed hurricane season, Engles said last month.

According to the association’s treasurer, the insurer learned that several roofs in the 20-building complex had reached the end of their useful lives but were not scheduled for replacement until next year.

The association board decided to leave the roofs uninsured through the remainder of hurricane season and keep the money it would have spent on insurance in its operating account to use for any needed repairs, the treasurer said.

The association got lucky as no hurricane threatened South Florida this year, but Engles said he lost $40,000 when he was forced to sell the unit for cash.

The bills were filed by Sen. Ana Maria Rodriguez, a Republican representing Monroe County and part of Miami-Dade County, and Rep. Hillary Cassel, who represents a large part of southern Broward County.

Neither Rodriguez or Cassel were available for comment on Friday, but Rodriguez’s spokesman Luke Strominger issued a statement attributed to Rodriguez explaining that the pilot program is intended to reduce insurance costs and increase choices for condo associations.

Eligibility would require a majority vote by condominium association members and roof inspections every two years. The bills also require the actual cash value of the covered roof to “align with” reserves required by Florida’s condominium law — meaning that the reserves must cover the remainder of the cost of a new roof after an actual cash value claim is paid by Citizens.

Large multimillion-dollar condominium complexes have been hit hard by the ongoing insurance crisis, particularly in light of the Champlain Towers collapse in Surfside in June 2021.

Few private-market companies are willing to cover large complexes and those that do have sought steep premium increases — leaving unit owners, often retirees, facing much higher association fees.

Citizens experienced significant growth in its number of commercial condo policies and value of covered condo properties in the third quarter of 2023 compared to the previous year.

According to data released by the Florida Office of Insurance Regulation, the number of commercial condo policies covered by Citizens increased by 148% — from 1,947 to 4,824 — during that time.

Meanwhile, the dollar value of covered properties more than tripled — from $17.6 billion to $78.6 billion, while premiums collected for those policies went up by nearly five times — from $117.3 million to $666.9 million.

Citizens spokesman Michael Peltier last month attributed the disproportionate rise in covered property value and premium to an increase in the number of buildings it insures with replacement value of $10 million or more. The increase resulted from the trouble associations that run those buildings are having finding full limits for wind coverage, he said.

The amount of coverage available for commercial buildings valued at $10 million or more isn’t capped and premium increases aren’t limited as they are for single-family homes Citizens covers, Peltier said.

The pilot program would go into effect on July 1 of next year and last through 2029, according to the bill. That would be too late for condo complexes looking to renew their insurance policies before the June 1 start of hurricane season.

Candace Bunker, Citizens director of legislative and cabinet affairs, said she plans to meet with Cassel next week “to learn more about what she envisions.”

Dulce Suarez-Resnick, an insurance agent in Miami who specializes in condo coverage, said “it’s not a horrible idea,” but as written, the bill leaves too many questions unanswered.

“Will Citizens be allowed to offer wind-only coverage outside of the wind-coverage area?” she asked. In Broward, Miami-Dade and Palm Beach counties, insurance customers must buy two policies — wind coverage from Citizens and a standard multiperil policy from Citizens or another insurer.

“If they allow you to buy that wind-only policy inland, that would be great,” she said.

Other questions must address depreciation for various roof types, the amount of the deductible for the wind-only portion, and the cost of the policy as the roof ages.

“Those are details that have to be worked out,” she said.