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Condos: Who Insures What? Who Pays for Damages?

The 2021 hurricane season began June 1, but water pipes can burst year-round. If an insurable event occurs in a condo, however, is it a unit owner’s job to pay or the association’s? It’s a simple question with a sometimes complicated answer.

NAPLES, Fla. – Questions often arise when there is an insurable event (such as when a water or sewer pipe bursts), who pays for the damage? The condominium association or the unit owner?

The answer will depend upon what the damaged items are. Section 718.111(11)(f), Florida Statutes, provides that: “(f) Every (Condominium Association) property insurance policy issued or renewed on or after January 1, 2009, for the purpose of protecting the condominium must provide primary coverage for:

  1. All portions of the condominium property as originally installed or replacement of like kind and quality, in accordance with the original plans and specifications.
  2. All alterations or additions made to the condominium property or association property pursuant to s. 718.113(2).
  3. The coverage must exclude all personal property within the unit or limited common elements, and floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit. Such property and any insurance thereupon is the responsibility of the unit owner.”

So, the association’s insurance policy covers the structures of the building(s) as originally installed or replaced, plus all approved alterations or additions to the building(s). The association policy also covers the unit A/C equipment (this was a change to the statute after Hurricane Irma to insure that all the air conditioning is repaired and turned on as quick as possible after a hurricane to prevent mold growth). The unit owners’ policies, if obtained, cover their personal property and some fixtures within the unit and floor, wall and ceiling coverings. The drywall in the units and the stuff behind the drywalls is the association, wherein the paint or wall paper on the drywall is insured by the unit owner.

While the association is required to carry insurance on the structures, the statute does not require unit owners to carry a unit policy, and many unit owners decide to self-insure their unit and not carry unit insurance unless their Declaration of Condominium requires them to do so (most do not). Many owners who do not have a mortgage decide to take the risk of self-insuring their condominium unit.

Another question that often arises is who pays for the dry-out of the unit (fans etc.) from a pipe burst, as the statute is silent on this. As both the association benefits from the dry-out (less chance of mold behind the walls) as well as the unit owner (property saved from turning moldy green or black), the dry out cost should be shared proportionally between the association and the unit owner depending upon how much they benefit. If it cannot be determined a proportional share, the dry out cost is usually shared equally – 50/50.

Who pays the association deductible for an internal unit drywall repair (unit perimeter drywall is Association responsibility) can be a complicated answer and depends upon whether there was ever a deductible opt-out vote of the members or not. If that question arises, you should check with your association’s legal counsel.

For non-insurable event damage (such as mold growth from a slow water leak over an extended period of time), you will need to look at your governing documents maintenance, repair and replacement responsibilities usually contained in your Declaration of Condominium to determine whether the association or the owner must pay for the repair.

Rob Samouce is a principal attorney in the Naples law firm of Samouce & Gal, P.A. He is a Florida Bar Board Certified Specialist in Condominium and Planned Development and concentrates his practice representing condominium, cooperative and homeowners’ associations in all their legal needs including the procedural governance of their associations, covenant enforcement, assessment collections, contract negotiations and contract litigation, real estate transactions, general business law, construction defect litigation and other general civil litigation matters. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time.

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