Brown Insurance Services Finds Contradiction Between Widely Utilized Standard Condominium Insurance Forms and Florida Condominium Statute 718

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Brown Insurance Services has discovered serious contradictions between legislatively mandated insurance requirements for Florida condominiums and the coverage forms currently being utilized by many insurers within the state. This requires the immediate attention of Florida condominium association managers, board members, and insurance agents.

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Brown Insurance Services of Panama City Florida recently discovered some significant coverage discrepancies between the forms being utilized by many of the insurance carriers that are currently writing insurance for condominium associations located throughout the State of Florida and statutorily required and mandated coverage. Working closely with many of those insurers Brown Insurance Services has been able to point out these potential pitfalls and attempt to provide some resolution.

The concern stems from the January 2009 legislative changes to Florida Statute 718 that now requires condominium associations to provide coverage for items that previously were specifically excluded by the Insurance Services Offices (ISO) 2003-2004 Florida Condominium Endorsement(s). A large majority of the condominium association insurers within the state had heretofore utilized this form as the standard for providing coverage for their associations and many still do.

Brown Insurance Services experienced a small claim on an association that they currently insure and the events around this claim revealed this coverage discrepancy between the legislation and the widely utilized coverage form. The particular issue of concern is that the 2009 legislative changes and some 2010 revisions to those changes made the HVACs the insuring responsibility of the association. The 2003-2004 ISO form(s) specifically exclude the HVACs from building coverage.

As many association managers and board members are well aware these very same statute changes required condominium associations to secure an appraisal every 36 months and that the associations utilize the values from such appraisal to arrive at insurance to value for the association property. Within these very same legislatively mandated appraisals there is typically a value shown for the HVACs, under the building replacement cost valuation, yet through Brown Insurance Services experience and research it has been determined that the policy language specifically excludes these particular items from building coverage.

As a result of this discovery many insurers have involved themselves with Brown Insurance Services and informed them that they are working on a solution that will be in tune with the current Florida Statute 718 revisions and many have thanked Brown Insurance Services for bringing this matter to their attention. Most companies have stated unequivocally that their desire is to be in concert with the state statute. Unfortunately the remedy for many insurers requires approval from the Florida Office of Insurance Regulation which can take time.

Brown Insurance Services has also been contacted by many insurance agents throughout the State of Florida that have been less than complimentary. Unfortunately this issue is real and will not go away without the efforts of all involved. What most insurance agents do not seem to grasp is that this issue if far better resolved prior to a CAT III or IV storm making landfall. Insurance companies could have $100’s of millions of dollars in losses in such an event for which, by virtue of their policy form, they could theoretically decline coverage. If this issue is addressed now and confirmation given of the intent of each insurance carrier prior to such an event, then the resolution of claims after such an event becomes much easier.

It appears in this instance that the old adage “an ounce of prevention is worth a pound of cure” has never been more apropos.

Brown Insurance Services has received the following verification from those companies shown:

  •      First Home Insurance Company has informed Brown Insurance Services that they are already utilizing a revised edition form that includes HVACs as covered items under the building coverage within their form.
  •     American Coastal Insurance Company currently has a filing in to the Office of Insurance Regulation in which they will utilize a newer edition form that would also include HVACs within their scope of coverage for building items. They have further stated that they would follow current Florida Statute in the event of loss going forward until appropriate approval has been received from the OIR on their current filing.
  •     ICAT/Lloyds has amended their form and is in the process of releasing a bulletin which will also make HVACs a covered item under building coverage within their policy. They also have a liberalization clause within their policy which will make the coverage effective for all policyholders, whether an endorsement is actually received amending the current policy or not, immediately upon release of the revised form. Their current bulletin is dated February 1, 2011 but is in the process of being released to all Florida agents currently.

Brown Insurance Services feels that most companies will largely want to “do the right thing” and respond similarly to those companies shown above and is continuing to attempt to get responses from all those involved.

Brown Insurance Services is a specialist in the Florida condominium insurance arena and works with many associations across the state. They have developed a registered trademarked proprietary insurance program specifically designed for Florida condominiums, “CondoShield”, and a specialist may be reached at (850)215-5384 with any questions you may have or via email at Jhancock(at)browninsuranceservices(dot)net.


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John W. "Jay" Hancock
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