“Understanding Insurance Obligations for Florida Homeowners’ Associations” – News-Press
Q: I own a home in an association and there have been ongoing discussions regarding what type of insurance our homeowners’ association must carry. Our homes are townhouse style with common walls and roofs and there has been confusion as to the type of property insurance policies that the association must have. Does Florida law specify what type of insurance homeowners’ associations like ours must carry? (T.R., via e-mail)
A: For homeowners’ associations governed by Chapter 720, the Florida Homeowners’ Association Act, the statute does not specify the type or extent of property insurance an association must carry. Rather, the type and extent of insurance that is required to be carried by the association, or by the individual owner(s), on the homes located within the association, will be controlled by the governing documents for the association. For example, in most single-family home-type communities, the association has no involvement with the insurance on the homes, as that is an obligation of the homeowner. However, homeowners’ associations with townhouse style buildings have documents that require the association, as a common expense of the association, to carry property insurance to protect the homes from damage caused by insurable losses such as fire or hurricanes. Again, this would be driven by the governing documents for the community, as the Act does not specify or discuss property insurance requirements for the association.
Rather, the only provision of the Act concerning any insurance policy that a homeowners’ association must carry is found in Section 720.3033(5) of the Act, which discusses the requirement that homeowners’ associations must maintain an insurance policy or fidelity bond for all persons who control or disburse the funds of the association. The Act requires that the association must maintain such an insurance policy or fidelity bond to cover the maximum amount of funds that will be in possession of the association or its management agent at any time. The Act also provides that the association, through a majority vote of the voting interests present at a properly noticed meeting of the association, may waive or reduce such requirement. Otherwise, the Act does not discuss or address any required insurance policy that must be carried by a homeowners’ association.
This is substantially different than the provisions of Chapter 718, the Florida Condominium Act, which contains a robust and comprehensive provision discussing the requirements of condominium associations for carrying property insurance to protect the condominium property. Section 718.111(11) of the Florida Condominium Act provides that the condominium association, as a common expense, is responsible for purchasing a property insurance policy protecting all the improvements located on the condominium property except for a limited list of excluded items, which include the finishes in the units. Otherwise, the association is generally responsible for insuring the condominium property against loss. The Condominium Act also requires that the condominium association maintain a insurance policy or fidelity bond covering all persons who have control of the association’s funds. However, the Condominium Act does not provide for any owner vote to waive or reduce such obligation.
If any association has questions regarding its requirements concerning purchasing insurance policies, including property insurance, or otherwise, the association should discuss these issues with its insurance professionals and legal service providers.
Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. Send questions to Joe Adams by e-mail to jadams@beckerlawyers.com. Past editions may be viewed at floridacondohoalawblog.com.
