Florida has seen large condominiums be hit hard with the ongoing insurance costs across the state. A pair of bills filed with the Florida Legislature seeks to make windstorm insurance coverage more affordable and available for condominiums if passed.

The bills would create a pilot program that requires Citizens Property Insurance Corp. (state owned) to cover roofs of condominium buildings at the actual cash (depreciated) value, versus the full replacement cost. The program would be created by the Office of Insurance Regulation and multiple situations have encouraged this bill to be brought forward to legislators.

One situation brought forward by the South Florida Sun Sentinel highlights Rick Engles story. Engles sought to sell his ate mothers condo unit this past summer. The buyers lender declined a mortgage loan when it was revealed the condo association’s insurer canceled the windstorm insurance during the hurricane season. The insurer had discovered several roofs had reached the end of their useful lives but they weren’t scheduled to be replaced until next year. The association board decided the roofs would be left uninsured and they would take the money saved from not spending on insurance and put it into their operating account for use of any needed repairs. Engles lost out on $40,000 on the condo unit when he was then forced to sell for cash-only.

Republican Senator Ana Maria Rodriguez and Representative Hillary Cassel filed the bills. Eligibility for the bills would require a majority vote by association members and roof inspections every 2 years. The actual cash value of the covered roof would need to align with reserves required by Florida law, meaning reserves must cover the remainder of the cost of a new roof after an actual cash value claim is paid by Citizens.

Fewer private market companies have been willing to cover large complexes and the complexes who have sought to be covered have seen steep premium increases, leaving unit owners (typically retirees) with higher association fees, and sometimes fees that are no longer affordable. Citizens has continued to see unprecedented growth with commercial condominium policies. The Florida Office of Insurance Regulation released data showing commercial condo policies increased 148% from 1,947 to 4,824 during the third quarter of 2022 to 2023. The dollar value of these properties has more than tripled during this time as well from $17.6 billion to $78.6 billion and policies for these properties went up nearly five times from $117.3 million to 666.9 million.

Michael Peltier, Citizens spokesman, attributed last month that a disproportionate rise in covered property values and premium to an increase in the number of buildings they insure with a replacement value surpassing $10 million. This increase is due to associations struggling to find full limits for wind coverage. Coverage for commercial buildings valued at $10 million or more is not capped, and premium increases are not as limited as compared to Citizens covered single family homes.

A pilot program would go into effect on July 1 of 2024 and last through 2029 as proposed by the bill. This would be too late for condo associations looking to renew policies prior to the June 1 start of the hurricane season. Citizens director of legislative and cabinet affairs, Candace Bunker, will meet with Rep. Cassel next week to learn more about what is envisioned by the bills.

Dulce Suarez-Resnick, an insurance agent based in Miami, considers the current bill not without merit but finds it lacking clarity on several crucial fronts. She raises questions, such as if Citizens will have the liberty to provide wind-only coverage beyond designated areas. In certain counties like Broward, Miami-Dade, and Palm Beach, policyholders are obliged to purchase two separate policies—one for wind coverage from Citizens and another multiperil policy from Citizens or another insurer. Furthermore, concerns remain regarding depreciation calculations for different roof types, the specified deductible for wind-only coverage, and policy cost fluctuations as roofs age.