Earlier this year, changes were made to our Association’s master insurance policy, which meant if we use our hurricane coverage, we must pay a 5% deductible of the total $82,603,620.00 liability. This works out to a $4.13M deductible, regardless of whether or not we use all $82.6 million.
At the time of this significant change, I reviewed the new policy and increased our homeowner’s insurance; to be more in-line with the changes that the Association made.
I worked out that by spending $121/year more on my policy, we’d have $10,200 in loss assessment coverage, per occurrence. I was betting that we’d use that hurricane coverage at least once in the next 80 years — more realistically, twenty. (That increase in coverage came with many other benefits, which I will share at a later time).
Confession: I was not smart enough to do this alone. My Allstate broker, with whom I have my homeowner’s policy, called me six months ago to discuss my coverage and the risks following the recent changes that the Association made.
I realize they are in the business of upselling coverage. However, looking back, they had my best interests in mind because, at that point, I was only aware of:
The Board passed the Rules and Regulations as well as the new Budget. We saw a large increase in Insurance on our Property. Of course, shortly after [signing] the new policy we found ourselves happy to have the increased coverage. The new amount is based on our assessment of property values that we have every 3 years.
Gazette, May 2022
Unfortunately, not everyone in our community has a homeowner’s insurance policy. Many are retired and are “self-insured” — a decision they made based on our Associations’ previous insurance policy. I feel terrible for those struggling to come up with $9.5k-$16k in the next couple of weeks (or 75 days with financing).
Loss assessment coverage
For anyone with a homeowner’s insurance policy, Chapter 627 of the Florida Insurance Code requires that all residential condominium insurance policies include at least $2,000 of common area loss assessment coverage. Additionally, this coverage is limited to a maximum deductible of only $250.
This bare minimum covers only 15-20% of our special assessment, which means the owner is still responsible for the remaining $7,500-$14,000.
The good news, your insurance may cover more than that
Some homeowner’s insurance policies may be able to cover a portion of that difference by using your “building property protection” coverage for the special assessment.
This coverage typically helps pay for belongings that are not personal property but also not covered by the condo association’s master policy — like an enormous deductible used to replace drywall or cabinetry.
Fortunately, our building property protection coverage will cover 100% of the difference not covered by our loss assessment coverage, meaning the entire special assessment will be covered.
If you have a homeowner’s insurance policy, check with your agent to see if you can use a portion of your building property protection coverage toward this massive special assessment.