Planning for Storm Damage as a Condo Buyer

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With about 8,500 miles of shoreline, Florida has the second-longest coastline of all the United States. This makes living on the coast an attractive option for home and condominium owners. Living on the coast can provide some amazing sunrises and sunsets, easy beach access, stunning views and refreshing ocean air. It also has its risks. With a hurricane season that runs for an entire half-year, hurricane damage is a real possibility.

Of course, as a single-family homeowner, a person is responsible for maintaining the necessary coverage on their home, including separate flood insurance. But what about a condominium owner? Will the condo association cover all the damage to a condo building, leaving owners only to worry about their own personal belongings? Does buying a condo, for example,  mean I don't have to worry about damage to the building from a hurricane? The answer is no, you very well may have valid concerns.

Homeowner associations, developers, and owners in the state are impacted by the Florida Condominium Act. This is legislation that lists the rights and obligations of each along with the general condominium provisions under Florida statutes. The Act sets guidelines for insurance requirements involving condominiums so someone is responsible to cover the costs related to an insurable event. What this means is that there are guidelines that delineate what is the responsibility of the association and the owner. Each should carry insurance to cover the areas they are responsible for. On the surface, the association maintains responsibility for common areas and structures. The condo owner is generally responsible for the interior walls and inward, including in-unit plumbing and wiring and their belongings. The problem arises when there is significant damage from an event like a hurricane that may exceed the coverage the association carries. This will usually be resolved through a special assessment.

A special assessment is a one-time fee an association levies on its owners to cover the difference between what insurance proceeds will cover and the total damage incurred. These assessments can reach into the tens of thousands of dollars per owned unit.

Condo owners can protect themselves through a savings account designed to absorb any such future expense. They can also ask about Loss Assessment Coverage that can be added to a condo owner's insurance policy. Beyond the deductible, this will cover any special assessments within the coverage limits of the policy.

Without Loss Assessment Insurance, a condo owner could potentially lose their condo through a significant assessment, such as after a hurricane. With a hurricane season that is in play 50% of the time, Florida condo owners should consider asking their insurance agents about Loss Assessment Insurance.