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BILL: CS/CS/SB’s 2086 & 2498

Page 15

upon the replacement cost of the property regardless of “full insurable value,” “replacement cost,” or similar language in the declaration of condominium.

Section 718.111(11)(a)1., F.S., permits condominium associations to provide adequate hazard insurance through a self-insurance fund that complies with ss. 624.460-624.488, F.S. The bill deletes the provision that permits condominium associations to self-insure against claims against the association, the association property, and the condominium property required to be insured by an association. The bill also deletes the requirement that the association must make a copy of the policy available for inspection by the unit owners at reasonable times.

Section 718.111(11)(a)2., F.S., maintains the current provision that permits three or more communities to obtain insurance for an amount equal to the PML for a 250-year windstorm event as determined through the use of a competent model that has been accepted by the Florida Commission on Hurricane Loss Projection Methodology. The bill requires that any policy providing such insurance coverage issued after July 1, 2008, must be reviewed and approved by the OIR, as follows:

  • Approval of the policy and related forms pursuant to ss. 627.410 and 627.411, F.S.;

  • Approval of the rates pursuant to s. 627.062, F.S.;

  • A determination that the loss model approved by the Commission was accurately and appropriately applied to the insured structures to determine the 250-year probable maximum loss; and

  • A determination that complete and accurate disclosure of all material provisions is provided to condominium unit owners prior to execution of the agreement by a condominium association.

The requirement for approval of forms and rates is required under current law if the policy is sold by an authorized (Florida licensed) insurer, but this would be a new regulatory requirement for a surplus lines insurer selling this product. The additional requirements of a determination by OIR that the loss model was accurately and appropriately applied and that a complete and accurate disclosure has been provided to unit owners are new requirements, whether sold by an authorized insurer or a surplus lines insurer.

Section 718.111(11)(a)3., F.S., maintains the current provision that permits condominium associations to consider deductibles when determining the adequate amount of hazard insurance coverage. However, the bill deletes the provision that the policy may include a deductible regardless of any requirement in the declaration of condominium for coverage by the association for “full insurable value,” “replacement cost,” or the like.

Section 718.111(11)(b), F.S., changes the current requirement for developer-controlled associations to exercise due diligence to obtain and maintain insurance. The bill requires that the developer-controlled association must exercise its “best efforts” to obtain and maintain insurance. Failure to obtain and maintain adequate hazard insurance during any period of developer control would constitute a breach of the fiduciary responsibility of the developer-appointed board members, unless the members can show that they made the best efforts to acquire coverage even if they failed.

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