Board Brief: Florida Condominium Insurance Coverage
As a board member, you understand the importance of protecting your property and maintaining its value. One critical component of this protection is insurance coverage. Condo and community association insurance is designed to cover claims or losses that can impact your community, from property damage and liability claims to natural disasters and other unexpected events.
Obtaining and maintaining insurance coverage for condo and community associations has become increasingly complex in recent years. In Florida, rising premiums and new building certification requirements mean many associations need help finding affordable, comprehensive coverage that meets their community’s needs.
FirstService Residential understand these challenges and we strive to provide expert guidance to help our communities protect their properties and manage risk effectively – from information on insurance policies and coverage options to resources for navigating complex regulations and compliance issues, we are dedicated to helping community associations thrive in today's uncertain insurance landscape.
In our latest episode of the Board Brief, our experts discussed the state of the insurance market, how to work with your insurance agent to get the best premiums for the right coverage, navigating building certification requirements and more. Discover what else was discussed by reading on.
State of the insurance market
The landscape for securing quality and affordable community association insurance has changed significantly in recent years due to many factors, including carriers leaving the marketplace and inflation. Because of the volatile climate, navigating property liability coverage can seem overwhelming.
“The insurance market is in a crisis today,” said Armando Garza, director of insurance for FirstService Financial. “Before 2017, we were in a soft market,” a term that describes a marketplace with large insurance carrier capacity and low insurance premiums. Competition among insurers was high, and premiums are underpriced to attract new policyholders. During the soft market, insurance policies were more accessible. But after 2017, when Hurricane Irma hit the Southern U.S., the global market began to experience an uptick in insurance rates. “So even though your property is in an area that didn’t experience a storm or major incident, there would be an impact on your insurance rates,” he said.
Over the past few years, Florida insurance carriers have left the state or become insolvent, straining remaining insurance carriers. High demand and low supply have led to the remaining carriers raising their premiums and becoming more stringent about their requirements and the types of properties they will insure to mitigate their risk. Inflation and litigation are also significant factors driving up premiums in today’s insurance market.
Learn more about how to manage rising insurance costs for your condo or community association. Read: Budgeting For Success: Managing the Rising Costs of Supplies, Labor and Insurance
So, given the volatility in the insurance market today, what can your board do to get the most competitive rates for your association? Here are 4 tips to help you get the best coverage at the best available premiums.
Tip #1. Comply with building safety laws
So what does this mean? For starters, if your board hasn’t already done so, it should immediately become familiar with newly passed legislation in Florida related to building safety. Senate Bill 4D requires all Florida condo and cooperative buildings, 3 stories or higher, to undergo milestone and structural inspections. Buildings must also be re-certified for electrical and structural safety as they approach the 40-year mark.
"To receive a competitive rate, you must show your insurance agent that you are complying with the law by demonstrating that you are actively taking steps to meet building safety requirement deadlines,” according to Lorenzo Cardenas, Commercial Property & Casualty Consultant at USI Insurance Services. “Provide as much detail as possible about where you are in the certification process and that your report is in progress. Insurance companies won't quote your association otherwise.”
Tip #2. Make sure your property appraisal is up to date
If your association has an appraisal due, start the process as soon as possible.
“It’s really important for boards to be proactive,” said Garza. "They should begin working with their association’s insurance agent at least 150 days before renewal. With limited carriers in the market, insurers are stringent and need time to review the required data carefully."
To prepare for submission, boards should gather their property's loss history data and share accurate information about the condition of their property, including all improvements and repairs. “Sharing inaccurate or incomplete information leads the carrier to make assumptions about your property's condition which could prevent you from getting the most competitive rate,” Garza added.
Every 36 months, Florida law requires associations to get replacement cost appraisals (the cost to rebuild the structures and site additions on properties).
“And because costs have gone up, we’re seeing the value of properties approaching the 36-month mark increase in some instances by 20%. Naturally, this results in a higher premium to insure the property,” he said. “And while Senate Bill 2D aims to drive rates down, it will take a while for this new legislation to impact the market.”
“Sit down with your agent and communicate with them. Their job is to work with boards, help them prepare and know what to expect,” Garza said.
Your professional management company should support you during the entire process, working together with your board to ensure you understand the appraisal process and requirements.
Tip #3. Consult the Experts
Under the new safety laws, only a licensed engineer or architect can assess buildings for structural safety and integrity. Engineers and architects have the expertise, knowledge and qualifications necessary to conduct milestone and structural inspections. Boards that haven’t already done so should hire a certified professional as soon as possible.
“You don’t want to wait to contact the professionals you need to help your association meet safety compliance deadlines and insurance qualification requirements,” said Miriam Santiago, regional director at FirstService Residential. “Work with your property management team to hire the right professionals.”
Tip #4. Chose the right broker
Interview several insurance brokers to find the right fit for your association. The right broker will represent your association in the most favorable light to ensure you get the most competitive rates.
Check their references and give them a tour of the property to help them understand your its condition. As rates climb, your instinct may be to shop for another insurance agent to get a cheaper rate. But keep in mind that you can only have one agent representing your association in the marketplace at any given time.
Getting the right coverage at a competitive rate for your condo or community association may be a challenge in this current market, but it is doable. Contact FirstService Financial for support with your property insurance needs.