Making sense of new insurance and condo reforms

After a string of devastating hurricanes and just 11 months following the Surfside condominium collapse, the Florida Legislature and Gov. Ron DeSantis delivered much needed reforms for Florida’s troubled insurance and condominium industries.

Some say the reforms made during the special session won’t do enough to bring down insurance rates for homeowner associations and consumers. Taken as a whole, however, curbing insurance fraud, bolstering insurer coffers and stabilizing the industry could make Florida more attractive for insurers. Ideally, this should increase competition and lower rates.

Among the key points, the new laws:

• Prohibit “assignment of benefits,” which give contractors the right to collect attorneys fees in litigation, which were being abused by unscrupulous contractors and lawyers.
• Provide a $2 billion “reinsurance” fund to reimburse a share of insurers’ losses related to the two largest hurricanes to affect the state in a contract year. Any savings must be passed on to policyholders. The law also increases financial oversight of insurers to ensure their fiscal stability.
• Require structural integrity inspections for condominiums and cooperative buildings three stories and higher and 30 years and older (25 years for buildings within three miles of the coast). If serious deterioration is found, more intensive inspections are required.
• Mandate a structural reserves review for condos and co-ops every 10 years. The law prohibits the waiver of funding for certain structural reserves. Before turning HOAs over to owners, developers must have started funding reserves or reviewed existing reserves. Developers cannot waive reserves. Reports of the inspections and reserves must be part of the association’s official records and provided to potential purchasers. Failure to do so will be considered a breach of the fiduciary duty by HOA board members.

Among other protections for property owners, the new laws:

• Require timely, post-storm inspection, informing policyholders of their rights to inspection reports, and provide an explanation of any claim payments that are below adjusters’ estimates.
• Prohibit insurers from refusing to issue or renew a homeowner’s policy solely because of the age of the roof if it is less than 15 years old. If denied for age, homeowners may ask for roof inspections.
• Create the “My Safe Florida Home” program. For owners of certain single-family residences, this will provide matching grants for hurricane mitigation inspections and “hardening” of those homes valued $500,000 or less.

If these laws affect you, start planning now. Contact inspectors for reports and contractors if repairs or hardening are called for. Review the structural reserve requirement and work with your HOA or co-op accountant to start budgeting for those expenses. If costs are forecast to rise, tell current and potential homeowners.

If these changes seem confusing, a lawyer versed in insurance and condominium HOA law could help bring clarity and possibly reduced insurance costs to your property or HOA.

Matthew Zifrony
Director with Tripp Scott, practicing in the areas of condominium and HOA law, commercial real estate and entrepreneurial business.

For more than 50 years, Tripp Scott has played a leadership role in issues that impact business.

Learn more at TrippScott.com.

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