Condominiums Facing Costs & Coverage Crisis – What It Means For Policyholders

MIAMI, July 19, 2021 /PRNewswire/ -- In the wake of the recent Surfside tragedy, the condominium insurance market is facing significant changes. Condo associations and unit owners can soon expect likely increases to premiums amidst a growing scarcity of insurance providers. Multiple insurance carriers are enacting potential 45-day cancellation notices if buildings 40 years and older cannot prove they have passed all inspections.

Condominiums in South Florida are already considered high-risk due to their common ownership structure, exposure to hurricane and tropical storm activity, and reputation for delaying much-needed maintenance to their infrastructure. As seen with the Champlain Towers collapse, ownership was aware of their structural problems but chose to not conduct maintenance to save money.  

The Champlain Towers collapse has rocked the condominium insurance industry, spurring much-needed changes and oversight in a short period of time. Miami-Dade and Broward are the only Florida counties currently requiring condominiums to conduct a reinspection after 40 years. With more than 50,000 community associations throughout the Sunshine State, insurers sending action letters demanding reinspection verification could have a ripple effect extending out of just Miami-Dade and Broward.

The most pressing risk facing residents is that if more carriers drop condo buildings due to their failure to prove recertification, the costs will rise for everyone. Insurers will require condos to address any structural issues, meaning residents will have to foot the bill to remain insured. Condos may be forced to move to state-owned Citizens Property Insurance Corp. if their private insurers drop them.

While these changes mainly apply to the condominium's building policy, residential policyholders may face changes to their own insurance policies that cover items inside the property. These policies carry coverage for special loss assessments which typically includes unexpected minor damages, not routine maintenance. If lawmakers decide to impose stricter regulations that require loss assessment coverage, insurers may choose to drop their condo policies altogether.

Chip Merlin, president of Tampa-based Merlin Law Group, a firm specializing in first-party property claims, believes insurance companies will hamper loss assessment provisions in their policies to get ahead of these new potential regulations. By doing this, insurers hope to prevent these provisions from being applied to any routine maintenance or structural repairs.

The cause of the Surfside collapse is still being investigated. Most significant changes to legislation or insurance regulations will not occur until the investigation is complete. However, Merlin suggests policyholders and condo associations brace themselves for a shift in both insurance costs and coverage.

About Merlin Law Group: Merlin Law Group has been dedicated to representing governmental, commercial, and residential policyholders with their insurance disputes for over 35 years. Founding member Chip Merlin published Pay Up!, a book detailing how policyholders can avoid a second disaster with their insurance company. As The Policyholder's Advocate™, we are committed to helping policyholders nationwide.

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SOURCE Merlin Law Group, P.A.