Insurance Appraisals Required Every 36 Months for Condominium Associations

by admin on May 6, 2010

in Insurance, Operations

Insurance Appraisals Are Required By Florida Law

While researching an insurance question for a client, I was led to this section of Chapter 718 of the Florida Statutes.  This is a good reminder for all boards of directors to research and determine the last time that your association had an insurance appraisal that determined the “full insurable value” or “replacement cost” of your association property.

Florida Statute 718.111 (11) (a) requires all condominium associations to have “adequate” hazard insurance and in order to comply with this section of the statute they are required to have an insurance appraisal of the condominium property at least once every 36 months (see below):

718.111 The association –

(11) INSURANCE–In order to protect the safety, health, and welfare of the people of the State of Florida and to ensure consistency in the provision of insurance coverage to condominiums and their unit owners, this subsection applies to every residential condominium in the state, regardless of the date of its declaration of condominium.  It is the intent of the Legislature to encourage lower or stable insurance premiums for associations described in this subsection.

(a) Adequate hazard insurance, regardless of any requirement in the declaration of condominium for coverage by the association for full insurable value, replacement cost, or similar coverage, shall be based upon the replacement cost of the property to be insured as determined by an independent insurance appraisal or update of a prior appraisal.  The full insurable value shall be determined at least once every 36 months.

This is an added regulation and additional expense that must be factored into all future condominium budgets.  In order to prepare for this, contact your insurance agent to determine the best course of action to take, its relative timing to comply and the costs associated with this requirement.  In addition, your association attorney can guide you further in this matter.   

Unfortunately, it is one more regulation that condominium associations now have to comply with, but due to the economy and lower construction costs there may be a good chance that replacement cost values will be lower than a few years ago and that your association will achieve lower premiums when completed, thus, at least offsetting the cost of the appraisal.

Here is a link to our Article in the APM News – Fall 2007 Edition “Insurance Appraisals for Community Associations” – which expands on this subject.

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