Jul. 3—TALLAHASSEE — Within days of the partial collapse of Champlain Towers South in
The deadly collapse of the 136-unit high rise has spooked an industry that had already considered older condos on the coast — with their hurricane exposure, their common ownership structure and reputation for delaying maintenance — a high risk, experts say.
Now, if a building can't comply with the insurance requests, the insurer can cancel the policy with a 45-day notice, or choose not to renew the policy, said
But many insurers are not waiting, he said.
"Everybody has moved very quickly because they have a lot of liability, and a lot of risk," Guillama said. "They're looking at any building that is showing more than 40 years of age, and they're asking for the recertification of the building."
Millions of homeowners
But the action letters could have a ripple effect across the state if they result in policies being dropped and a tightening of the insurance market.
Half of all Floridians live in property covered by a condominium or home owners association, and there are more than 50,000 community associations in the state, said
"This is a game changer and the conversation has completely changed in a week," he said.
The condo insurance industry "was already in disarray and has been in disarray since Hurricane Irma hit," said
But after the unexplained collapse of a massive section of Champlain Towers South last week, companies are not only reviewing property insurance policies on older condos but are also requiring proof of recertification on liability insurance and umbrella policies that cover directors and officers, Guillama said.
"If the board, which makes the decisions for the whole association, did not make the right decisions on behalf of the safety and protection of the condo owners, those policies are going to be affected," he said. "Because if the directors and officers knew of a problem and did not act, they are liable."
Normally, the policy limits for a standard liability policy for all directors and officers on condo board is
Costs likely to rise
If some carriers drop coverage for condo buildings because of their failure to show proof of recertification, that increases the possibility that costs will rise for everyone, Guillama said.
"The No. 1 budget issue for every condo is their insurance and as that goes up there is less money for other things," Moore explained. "It's constantly a threat because that market is shrinking."
There are only five admitted carriers currently writing insurance for condos in
Guillama said many insurance carriers regulated by the state of
If carriers drop condos, they could turn to
Guillama said he has received letters for his clients from insurance companies
"If the client doesn't turn around and do what they want, they're going to send out a cancellation notice even midterm," Clarkson explained.
"OIR is monitoring the
Clarkson said that he is not aware of any insurance companies writing letters to condominiums that are 40 year or older in other parts of the state, but, he adds: "It would not surprise me if they come."
Need for reserves
Guillama, Clarkson, Moore and advocates who have tried for years to expand
Guillama and Clarkson said that most of the condos they work with have few, if any, reserves and that contributes to their inability to move quickly to manage maintenance problems.
The cause of the Champlain Towers South collapse is still unknown, and experts say it may take years for a forensic investigation to single out the source of the building's failure. But a 2018 engineering report done for the building's condominium association detailed "abundant cracking" in concrete columns, beams and walls and said that the lack of proper drainage under the pool deck had caused "major structural damage."
Six engineering experts interviewed by the
Documents from the Champlain Towers South condo association show that board members disagreed over the assessment for its building repairs, which first were estimated at
In a court hearing on Thursday, lawyers for the condominium association and its insurers said the building has
For years in the state Legislature, former Rep.
Robaina said he now believes that if the Champlain Towers South association had money in its reserve fund when it learned of the structural deficiencies in its building, "I don't think this board would have been so hesitant," he said. "They would have had an account with money sitting in there."
Projects covered include roof repairs, elevator maintenance and cement and foundation damage and other life-safety issues. However, once the reserve budget has been determined, state law also allows a majority of the members at a condominium board meeting to waive the reserve requirement. When that decision is made, it must be disclosed to owners on the first page of the annual budget.
The concern, Robaina said, is that with every condo association it's "a bunch of volunteers that don't have any experience making decisions on the integrity, the structural integrity of these buildings."
He said that most are reluctant to impose a special assessment that will raise maintenance payments on their members because, like politicians, they don't want to be voted off the board of directors, Robaina said. "So every condo in
"Fundamentally, it's a not-for-profit organization, a multi-million dollar not-for-profit organization," Nordlund said. "They need to surround themselves with a team so they can make policy decisions."
"Wake-up call' for insurance industry
If state and local officials don't update the state's condo laws, the experts all agreed that the insurance industry would use its leverage to demand more frequent inspections and better maintenance records to retain coverage.
"What happened in
"We work with insureds to help manage risk," he said. "When I look at a building and there's no maintenance logs, when I look at a building and the HVAC or heating system hasn't been updated in years, you got to wonder whether or not that's a good place."
Guillama predicts the
"The insurance industry most likely is going to be more aware and probably ask for inspections, even on newer buildings," he said. "But for right now, they're focusing on their worst part, which is the buildings that show they are more than 40 years of age."
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