October 19, 2019
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       Florida Senate - 2009                              CS for SB 714
       By the Committee on Regulated Industries; and Senators Jones and
       580-02946-09                                           2009714c1
    1                        A bill to be entitled                      
    2         An act relating to condominium insurance; amending s.
    3         718.111, F.S.; requiring that adequate property
    4         insurance be based upon the replacement cost of the
    5         property to be insured as determined by an independent
    6         appraisal or update of a prior appraisal; requiring
    7         that such replacement cost be determined at least once
    8         within a specified period; providing means by which an
    9         association may provide adequate property insurance;
   10         authorizing an association to consider deductibles
   11         when determining an adequate amount of property
   12         insurance; providing that failure to maintain adequate
   13         property insurance constitutes a breach of fiduciary
   14         duty by the members of the board of directors of an
   15         association; revising the procedures for the board to
   16         establish the amount of deductibles; requiring that an
   17         association controlled by unit owners operating as a
   18         residential condominium use its best efforts to obtain
   19         and maintain adequate property insurance to protect
   20         the association and certain property; requiring that
   21         every property insurance policy issued or renewed on
   22         or after a specified date provide certain coverage;
   23         excluding certain items from such requirement;
   24         providing that excluded items and any insurance
   25         thereupon are the responsibility of the unit owner;
   26         requiring that condominium unit owner’s policies
   27         conform to certain provisions of state law; deleting
   28         provisions relating to certain hazard and casualty
   29         insurance policies; conforming provisions to changes
   30         made by the act; creating s. 627.714, F.S.; requiring
   31         that coverage under a unit owner’s policy for certain
   32         assessments include at least a minimum amount of loss
   33         assessment coverage; requiring that every property
   34         insurance policy to an individual unit owner contain a
   35         specified provision; providing an effective date.
   37  Be It Enacted by the Legislature of the State of Florida:
   39         Section 1. Paragraphs (a), (b), (c), (d), (f), (g), (j),
   40  and (n) of subsection (11) of section 718.111, Florida Statutes,
   41  are amended to read:
   42         718.111 The association.—
   43         (11) INSURANCE.—In order to protect the safety, health, and
   44  welfare of the people of the State of Florida and to ensure
   45  consistency in the provision of insurance coverage to
   46  condominiums and their unit owners, this subsection applies to
   47  every residential condominium in the state, regardless of the
   48  date of its declaration of condominium. It is the intent of the
   49  Legislature to encourage lower or stable insurance premiums for
   50  associations described in this subsection.
   51         (a) Adequate property hazard insurance, regardless of any
   52  requirement in the declaration of condominium for coverage by
   53  the association for full insurable value, replacement cost, or
   54  similar coverage, shall be based upon the replacement cost of
   55  the property to be insured as determined by an independent
   56  insurance appraisal or update of a prior appraisal. The
   57  replacement cost full insurable value shall be determined at
   58  least once every 36 months.
   59         1. An association or group of associations may provide
   60  adequate property hazard insurance through a self-insurance fund
   61  that complies with the requirements of ss. 624.460-624.488.
   62         2. The association may also provide adequate property
   63  hazard insurance coverage for a group of no fewer than three
   64  communities created and operating under this chapter, chapter
   65  719, chapter 720, or chapter 721 by obtaining and maintaining
   66  for such communities insurance coverage sufficient to cover an
   67  amount equal to the probable maximum loss for the communities
   68  for a 250-year windstorm event. Such probable maximum loss must
   69  be determined through the use of a competent model that has been
   70  accepted by the Florida Commission on Hurricane Loss Projection
   71  Methodology. No policy or program providing such coverage shall
   72  be issued or renewed after July 1, 2008, unless it has been
   73  reviewed and approved by the Office of Insurance Regulation. The
   74  review and approval shall include approval of the policy and
   75  related forms pursuant to ss. 627.410 and 627.411, approval of
   76  the rates pursuant to s. 627.062, a determination that the loss
   77  model approved by the commission was accurately and
   78  appropriately applied to the insured structures to determine the
   79  250-year probable maximum loss, and a determination that
   80  complete and accurate disclosure of all material provisions is
   81  provided to condominium unit owners prior to execution of the
   82  agreement by a condominium association.
   83         3. When determining the adequate amount of property hazard
   84  insurance coverage, the association may consider deductibles as
   85  determined by this subsection.
   86         (b) If an association is a developer-controlled
   87  association, the association shall exercise its best efforts to
   88  obtain and maintain insurance as described in paragraph (a).
   89  Failure to obtain and maintain adequate property hazard
   90  insurance during any period of developer control constitutes a
   91  breach of fiduciary responsibility by the developer-appointed
   92  members of the board of directors of the association, unless the
   93  members can show that despite such failure, they have made their
   94  best efforts to maintain the required coverage.
   95         (c) Policies may include deductibles as determined by the
   96  board.
   97         1. The deductibles shall be consistent with industry
   98  standards and prevailing practice for communities of similar
   99  size and age, and having similar construction and facilities in
  100  the locale where the condominium property is situated.
  101         2. The deductibles may be based upon available funds,
  102  including reserve accounts, or predetermined assessment
  103  authority at the time the insurance is obtained.
  104         3. The board shall establish the amount of deductibles
  105  based upon the level of available funds and predetermined
  106  assessment authority at a meeting of the board. Such meeting
  107  shall be open to all unit owners in the manner set forth in s.
  108  718.112(2)(e). The notice of such meeting must state the
  109  proposed deductible and the available funds and the assessment
  110  authority relied upon by the board and estimate any potential
  111  assessment amount against each unit, if any. The meeting
  112  described in this paragraph may be held in conjunction with a
  113  meeting to consider the proposed budget or an amendment thereto.
  114         (d) An association controlled by unit owners operating as a
  115  residential condominium shall use its best efforts to obtain and
  116  maintain adequate property insurance to protect the association,
  117  the association property, the common elements, and the
  118  condominium property that is required to be insured by the
  119  association pursuant to this subsection.
  120         (f) Every property hazard insurance policy issued or
  121  renewed on or after January 1, 2009, for the purpose of
  122  protecting the condominium shall provide primary coverage for:
  123         1. All portions of the condominium property as originally
  124  installed or replacement of like kind and quality, in accordance
  125  with the original plans and specifications.
  126         2. All alterations or additions made to the condominium
  127  property or association property pursuant to s. 718.113(2).
  128  3. The coverage shall exclude all personal property within the
  129  unit or limited common elements, and floor, wall, and ceiling
  130  coverings, electrical fixtures, appliances, water heaters, water
  131  filters, built-in cabinets and countertops, and window
  132  treatments, including curtains, drapes, blinds, hardware, and
  133  similar window treatment components, or replacements of any of
  134  the foregoing which are located within the boundaries of the
  135  unit and serve only such unit. Such property and any insurance
  136  thereupon shall be the responsibility of the unit owner.
  137         (g) A condominium unit owner’s policy shall conform to the
  138  requirements of s. 627.714. Every hazard insurance policy issued
  139  or renewed on or after January 1, 2009, to an individual unit
  140  owner must contain a provision stating that the coverage
  141  afforded by such policy is excess coverage over the amount
  142  recoverable under any other policy covering the same property.
  143  Such policies must include special assessment coverage of no
  144  less than $2,000 per occurrence. An insurance policy issued to
  145  an individual unit owner providing such coverage does not
  146  provide rights of subrogation against the condominium
  147  association operating the condominium in which such individual’s
  148  unit is located.
  149         1.All improvements or additions to the condominium
  150  property that benefit fewer than all unit owners shall be
  151  insured by the unit owner or owners having the use thereof, or
  152  may be insured by the association at the cost and expense of the
  153  unit owners having the use thereof.
  154         2.The association shall require each owner to provide
  155  evidence of a currently effective policy of hazard and liability
  156  insurance upon request, but not more than once per year. Upon
  157  the failure of an owner to provide a certificate of insurance
  158  issued by an insurer approved to write such insurance in this
  159  state within 30 days after the date on which a written request
  160  is delivered, the association may purchase a policy of insurance
  161  on behalf of an owner. The cost of such a policy, together with
  162  reconstruction costs undertaken by the association but which are
  163  the responsibility of the unit owner, may be collected in the
  164  manner provided for the collection of assessments in s. 718.116.
  165         1.3. All reconstruction work after a property casualty loss
  166  shall be undertaken by the association except as otherwise
  167  authorized in this section. A unit owner may undertake
  168  reconstruction work on portions of the unit with the prior
  169  written consent of the board of administration. However, such
  170  work may be conditioned upon the approval of the repair methods,
  171  the qualifications of the proposed contractor, or the contract
  172  that is used for that purpose. A unit owner shall obtain all
  173  required governmental permits and approvals prior to commencing
  174  reconstruction.
  175         2.4. Unit owners are responsible for the cost of
  176  reconstruction of any portions of the condominium property for
  177  which the unit owner is required to carry property casualty
  178  insurance, and any such reconstruction work undertaken by the
  179  association shall be chargeable to the unit owner and
  180  enforceable as an assessment pursuant to s. 718.116. The
  181  association must be an additional named insured and loss payee
  182  on all casualty insurance policies issued to unit owners in the
  183  condominium operated by the association.
  184         3.5. A multicondominium association may elect, by a
  185  majority vote of the collective members of the condominiums
  186  operated by the association, to operate such condominiums as a
  187  single condominium for purposes of insurance matters, including,
  188  but not limited to, the purchase of the property hazard
  189  insurance required by this section and the apportionment of
  190  deductibles and damages in excess of coverage. The election to
  191  aggregate the treatment of insurance premiums, deductibles, and
  192  excess damages constitutes an amendment to the declaration of
  193  all condominiums operated by the association, and the costs of
  194  insurance shall be stated in the association budget. The
  195  amendments shall be recorded as required by s. 718.110.
  196         (j) Any portion of the condominium property required to be
  197  insured by the association against property casualty loss
  198  pursuant to paragraph (f) which is damaged by casualty shall be
  199  reconstructed, repaired, or replaced as necessary by the
  200  association as a common expense. All property hazard insurance
  201  deductibles, uninsured losses, and other damages in excess of
  202  property hazard insurance coverage under the property hazard
  203  insurance policies maintained by the association are a common
  204  expense of the condominium, except that:
  205         1. A unit owner is responsible for the costs of repair or
  206  replacement of any portion of the condominium property not paid
  207  by insurance proceeds, if such damage is caused by intentional
  208  conduct, negligence, or failure to comply with the terms of the
  209  declaration or the rules of the association by a unit owner, the
  210  members of his or her family, unit occupants, tenants, guests,
  211  or invitees, without compromise of the subrogation rights of any
  212  insurer as set forth in paragraph (g).
  213         2. The provisions of subparagraph 1. regarding the
  214  financial responsibility of a unit owner for the costs of
  215  repairing or replacing other portions of the condominium
  216  property also apply to the costs of repair or replacement of
  217  personal property of other unit owners or the association, as
  218  well as other property, whether real or personal, which the unit
  219  owners are required to insure under paragraph (g).
  220         3. To the extent the cost of repair or reconstruction for
  221  which the unit owner is responsible under this paragraph is
  222  reimbursed to the association by insurance proceeds, and, to the
  223  extent the association has collected the cost of such repair or
  224  reconstruction from the unit owner, the association shall
  225  reimburse the unit owner without the waiver of any rights of
  226  subrogation.
  227         4. The association is not obligated to pay for repair or
  228  reconstruction or repairs of property casualty losses as a
  229  common expense if the property casualty losses were known or
  230  should have been known to a unit owner and were not reported to
  231  the association until after the insurance claim of the
  232  association for that property casualty was settled or resolved
  233  with finality, or denied on the basis that it was untimely
  234  filed.
  235         (n) The association is not obligated to pay for any
  236  reconstruction or repair expenses due to property casualty loss
  237  to any improvements installed by a current or former owner of
  238  the unit or by the developer if the improvement benefits only
  239  the unit for which it was installed and is not part of the
  240  standard improvements installed by the developer on all units as
  241  part of original construction, whether or not such improvement
  242  is located within the unit. This paragraph does not relieve any
  243  party of its obligations regarding recovery due under any
  244  insurance implemented specifically for any such improvements.
  245         Section 2. Section 627.714, Florida Statutes, is created to
  246  read:
  247         627.714Residential condominium unit owner coverage; loss
  248  assessment coverage required; excess coverage provision
  249  required.—For policies issued or renewed on or after July 1,
  250  2009, coverage under a unit owner’s residential property policy
  251  shall include property loss assessment coverage of at least
  252  $2,000 for all assessments made as a result of the same direct
  253  loss to the property, regardless of the number of assessments,
  254  owned by all members of the association collectively when such
  255  loss is of the type of loss covered by the unit owner’s
  256  residential property insurance policy, to which a deductible
  257  shall apply of no more than $250 per direct property loss. If a
  258  deductible was or will be applied to other property loss
  259  sustained by the unit owner resulting from the same direct loss
  260  to the property, no deductible shall apply to the loss
  261  assessment coverage. Every individual unit owner’s residential
  262  property policy must contain a provision stating that the
  263  coverage afforded by such policy is excess coverage over the
  264  amount recoverable under any other policy covering the same
  265  property.
  266         Section 3. This act shall take effect upon becoming a law.

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