INSURANCE AND THE WINDS OF CHANGE

Hi all,

At the Delegate Assembly meeting of March 7th. 2008 Dan Gladstone discussed a Court decision placing certain Limited Common Element casualty losses on the Unit Owner or the Association.

Dan characterized this decision as a Direct Reversal of prior law.

The following URL is the decision in question; it was rendered by Administrative Law Judge John Van Laningham. I would suggest that while it is the current state of the Law; it is highly likely to be appealed; and furthermore, related legislation is in the offing!

http://www.katzkorr.com/pdfs/DBPRFountains.pdf

And here is a Sun Sentinel article about the issue:.
Dave
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Legislation may clarify condo claims

By CHRIS GUANCHE Forum Publishing Group
February 21, 2008

Still reeling from the havoc of past hurricane seasons, condo associations soon may be given a specific way in which to deal with insurance claims after the next session of the Florida Legislature, which starts March 4.

The new legislation will be introduced by state Sen. Ted Deutch, D- Boca Raton, and would require associations to pay for every common element they insure.

The new legislation also directly addresses a policy reversal by the Department of Business and Professional Regulation, which changed the way the department interpreted two landmark cases in condo law.

A ruling handed down in the case of the Fountains South condominium in January by Administrative Law Judge John Van Laningham of the Division of Administrative Hearings was guided in part by an earlier ruling in the case of the Plaza East condominium in Broward County, which declared that associations were responsible for covering any damages to common elements that they insure.

Citing the earlier ruling from the Plaza East case, the department directed the Fountains South association to pay for the repairs.

The Fountains South case decided whether the association should cover the costs for balcony screens that were damaged during Hurricane Wilma in 2005. Although only the balcony is covered by the association, a unit owner filed a complaint with the Department of Business and Professional Regulation to make the association pay for damage to a screen enclosure that the unit owner installed.

Coverage conflicts are common because of the changing nature of condominium documents, said Kenneth Direktor, an attorney with the law firm Becker & Poliakoff, which is helping to write the new legislation.

Direktor said that over time, associations began insuring elements such as drywall, windows and sliding doors, which the documents didn't necessarily identify as common elements, making it difficult to understand exactly what each association would cover.

Now associations must follow only what is in their individual documents."What you had is the association insuring these things, but under the documents the owner is being obligated to reconstruct them if they were damaged," Direktor said.

Many cases involving damage repairs have been decided by the department's interpretation of those two landmark cases, Direktor said, and the reversal by Laningham could open a veritable Pandora's Box of new cases.

"Do we have to go back and reconcile and assess the owners whose units were damaged, and reimburse the people who paid their shares, when they shouldn't have been charged those shares?" Direktor said.

While the new legislation does require associations to pay for whatever elements they insure, an association can also vote to opt out and have unit owners insure certain elements on their own.

The legislation also includes an exemption that makes owners responsible for damage to common elements caused by their own negligence, such as forgetting to put up shutters during a hurricane.

Deutch believes the legislation would make the situation more fair for owners."Improvements that are installed by the unit owner are covered by the unit owner's policy," Deutch said. "That way the unit owners don't all share the cost of damage to one particular screen that had been installed by one specific unit owner."