Insurance is one of the largest line items in a condo association budget and one of the most frequent sources of confusion between boards and unit owners. The statute draws a line between what the association insures and what the unit owner insures, but the declaration often modifies that line.
What the association must insure
Under F.S. 718.111(11), the association must obtain and maintain adequate property insurance for the common elements and association property. The policy must cover:
- All portions of the condominium property as originally installed or as replacement of like kind and quality
- All common elements
- Association property in the common elements
The insurance must be in an amount equal to the full insurable value of the covered property.
What the unit owner insures
Unit owners are generally responsible for insuring:
- The interior of their unit (improvements, fixtures, floor coverings, appliances)
- Personal property within the unit
- Personal liability
The exact line between association coverage and unit owner coverage depends on the declaration. Some declarations define "unit" to include everything within the walls. Others define it more narrowly. The declaration controls, and 718.111(11) defers to it where specific.
The deductible question
The association's master policy has a deductible. When damage occurs to a unit and the cause is insured under the master policy (for example, a pipe break in a common element that damages a unit interior), the question of who pays the deductible depends on the declaration and the circumstances.
Under 718.111(11), the board establishes the deductible amount based on available funds and the assessment authority approved at a meeting of the unit owners.
Prevent disputes before they start
The board should ensure that every unit owner understands the division of coverage: what the association policy covers, what the unit owner must insure independently, and how deductibles are handled. A one-page summary distributed annually prevents the majority of insurance disputes.
The board should ensure that every unit owner understands the division of coverage: what the association policy covers, what the unit owner must insure independently, and how deductibles are handled. A one-page summary distributed annually prevents the majority of insurance disputes.
This post summarizes the statutory framework. Your declaration may modify certain provisions. Consult your association's attorney before acting on any specific situation.