LAAIA Agents Tackle Condo Policy Issues, Find Statutes Confusing

July 7, 2005

Major changes in Florida Statute 718 and how insurance agents should write condominium policies, based on what part of a condominium property should be covered by the condominium association and what part must be covered by the condominium owner, was discussed by Keri Rayborn, of Rayborn Consultants during the July 7 afternoon sessions on “Everything Condominium,” at the 35th Annual Latin American Association of Insurance Agents Conference and Exhibition in Hollywood, Fla.

Rayborn pointed out the Florida Legislature made major changes in Statute 718 after Jan. 1, 2004. She pointed out that condominium coverage is often confusing due to the fact policies have to be written for both the condominium association and the condominium owner.

Basically, she said, the condominium association’s policy covers all external grounds, the building and common areas; while the condominium owner’s policy covers everything else, the interior of the condominium and everything added by the owner.

“The legislation contains some tricky terms and there are four or five suits now in process in which what should be covered by which policy is in contention,” Rayborn said.

Rayborn advised that the best way to ascertain what is covered is by which policy requires you to examine the original plans to determine what part of a condominium development is a common area. She said that in some areas of North Florida where condominiums were damaged near the water, it is hard to determine if a balcony has blown off a condominium unit, the only way to determine who should pay for the damage depends on the original plans.

“You have to take a look at exclusions,” she explained. “Everything not written down on the list of exclusions would be the responsibility of the master association. However, if the owner changed anything or upgraded it from the original, then the owner would be responsible.”

In some situations, Rayborn illustrated, if the original fixtures or appliances in a condominium was valued at $5,000, and if they were upgraded to $10,000, then it would be a tricky situation, because the condominium association’s coverage would take care of the actual $5,000 value, but the condominium owner would have to have his own coverage to take care of the additional $5,000.

With property and casualty insurance, the key seemed to be public access. If an area was publicly accessible, then it would be covered by the condominium association’s policy; but if for instance a condominium owner had screened in a porch or in some way limits public access, then he would have to insure that area.

Rayborn also said that Florida Statute 718 makes it mandatory for condominium owners to maintain personal insurance on their property. Everyone at the seminar, including Rayborn agreed that very few owners realize this and many go without coverage.

LAAIA-members attending the session pointed out that it is often a problem trying to determine how much personal insurance their policyholders need on a condominium. Rayborn advised them to tell anyone who wants a policy to hire an appraiser to come in and determine the value of a property and its contents and then submit an itemized list to their agent. She said that having such a list enables the agent to more correctly estimate the value of the property. She advised agents that if a policyholder does not have a list of contents, that it is a good idea to write them a letter telling them they should obtain an appraisal.

The LAIA conference moves into full-swing Friday morning with two presentations from 9 a.m. to noon on “How to Turn Your Technical Knowledge Into $$$,” and another on “Personal and Commercial Lines, Why Flood Insurance is Important to Both.” The association luncheon will be from noon to 2 p.m., and the trade fair “In Pursuit of a Vision,” takes place from 2:30 to 7:30 p.m.

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