The Heather Walk Declaration of Condominium requires the association to purchase insurance. It must have liability coverage for the association and property damage insurance for condominium buildings, limited common elements and the common elements.
Section 718.111 (11) (f) 3 Florida Statutes determines which building components are covered.
To summarize the associations policy stops inside the exterior walls of a unit. Owners are responsible for floor, wall, and ceiling coverings, fixtures, personal property and liability exposures and that is why owners and tenants need their own insurance. An HO-6 policy is the form used by owners to insure condominium units. The HO-6 policy picks up where the association policy left off insuring such things as liability claims against the owner, personal property, loss of use and loss assessment coverage however it would not cover earthquakes or floods but can be purchased as an additional policy or endorsement.
Calculating the associations deductible The insurance deductible is determined by the peril. There are two methods to calculated the deductible, one for damage caused by windstorm or hail, and the other is for all other perils except flood and earthquakes.
Flood and earthquake coverage remains the responsibility of unit owners.
For all perils other than flood, earthquake, windstorm and hail, the deductible is $1,000 per building.
For damage caused by windstorm or hail the deductible is 3% of the value of each building that is impacted.
Example 1. Fire: If the clubhouse were to burn down the deductible is $1,000. Example 2. Windstorm: A tornado levels the clubhouse which is valued at $571,900, the deductible would be $17,157 which equates to 3% of the building value. In either case unit owners are required to pay the deductible and in the case of the windstorm it is likely through a loss assessment.
Understanding loss assessment If the association were to sustain damage from a covered peril the board can approve a loss assessment to recoup the associations insurance deductible.
Loss assessment coverage is not provided for in the associations policy but Section 627.714 Florida Statutes* requires insurers to offer at least $2,000 in property loss assessment coverage to unit owners.
Assessing coverage valuations; Through time as the property value for your unit and the common elements increase seriously consider increasing your coverage limits. Some things to consider: inflation, appreciation, or improvements that have been made.
*Section 627.714 Florida Statutes does not address a loss assessment that may be levied for claims related to liability losses, e.g. a guest is seriously injured on common property & the courts award a judgment that is higher than the amount of liability coverage provided by the associations policy. For this kind of loss all unit types should consider purchasing more than $2,000 to cover court awarded judgments.
This is why you want every unit to be insured!
Statistically the national average is 25% of unit owners do not carry insurance.
Let's apply this to Heather Walk whereby in this example building one is a complete loss due to a tornado.
The associations insurance will pay to rebuild building one excluding the interior of each unit, which is a unit owner responsibility. In applying the national average to building one of 32 units, 24 units would be insured and 8 units would not.
This means 24 owners would receive a settlement from their HO-6 policy and the remaining 8 owners have no insurance in which to collect. With no insurance it is likely the 8 owners will walk away from their units. For the association this would mean a loss of monthly fees.
Those lost fees will be inherited & billed to the remaining owners, & of the 24 unit owners that did purchase insurance, it may be insufficient because they may have purchased insurance strictly on their unit purchase price & never allowed for inflation, appreciation, or improvements.
Keep in mind that unit owners that commit to reconstructing their unit are still responsible for continuing to pay their monthly fee even if your unit is deemed uninhabitable. As you can see it can become rather costly, with the regular monthly fee, an ongoing mortgage, the likely hood of a loss assessment, the possibility of being under insured and the debt left by the eight unit owners that walked. So the reality is unit owners have a collective responsibility to properly insure their unit because it does not take an F5 tornado to cause a lot of damage.
The case for obtaining flood insurance.
Floods can be caused by hurricanes resulting in storm surge. Roughly 25% of all flood insurance claims came from areas not considered high risk.
Typically an HO-6 policy does not cover losses caused by flood. You can protect your unit with flood insurance from the National Flood Insurance Program. To qualify, your unit must be your principal residence, and it must be owner occupied. There is a 30 day waiting period before a flood policy becomes effective.
What about Federal Disaster Assistance; Fact, the average Individual and Household Program award is around $4,000. The cost of flood insurance coverage depends on the flood zone risk area.
Heather Walk is located in two moderate to low risk flood areas referred to as flood Zone X, also known as Zone B, and flood zone X-500 (500 Year Flood Zone).
Defining the Flood Zone: Zone X are areas that have a 0.2% probability of flooding every year (also known as the "500-year floodplain"). Properties in Zone X are considered to be at moderate risk of flooding under the National Flood Insurance Program. Flood insurance is not required for properties in Zone X.
Protect yourself from unlicensed contractors! Residents are reminded to scrutinize carefully who you hire to do post storm repairs. Miami-Dade County Code Chapter 10 Section 10-3(a) require construction contractors to be licensed. Contracts performed by unlicensed contractors are unenforceable per Section 489.128 Florida Statutes. Only after a Natural Disaster Area has been declared in Miami-Dade County is it acceptable to employ contractors who have not been licensed through the State of Florida or Miami-Dade County but those contractors must first register with Miami-Dade County and meet several other requirements. Disaster or not residents are encouraged to verify if a contractor is licensed, insured and if there are outstanding complaints against the license holder by calling the Miami-Dade County Contractor Licensing Section at 786-315-2880.