Legislation proposes allowing condos to insure roofs at current value instead of replacement value

Bipartisan legislation would introduce a new option for insuring condominiums that’s aimed at reducing the cost of insurance and improving condos’ resale options, but it also reduces the payout should disaster strike.

Republican Sen. Ana Maria Rodriguez of Miami and Democratic Rep. Hillary Cassel of Dania Beach filed identical bills (SB 802, HB 655) that would create a pilot program for condominiums insured with Citizens Property Insurance. Condos would have the option of insuring a roof for actual cash value instead of replacement cost value, as they must now.

Instead of the current system, by which a condo must pay premiums based on the cost of replacing a roof, a condo would have the option of getting a policy whereby the premium is calculated according to the actual cash value of the roof. That would mean the premium is based on the roof’s age-depreciated value.

“South Florida’s condominium associations are plagued with high premiums,” Rodriguez said in a prepared news release. “With this bill, we will open up an avenue for condominiums to reduce their cost and increase consumer choice in the marketplace.”

In addition to the ballooning cost in insurance premiums that have hit all property owners in the state, condos have new requirements to meet that were instituted to stave off the circumstances that led to the Surfside condo disaster. The first deadline is Dec. 31, 2024, for condos of a certain age and height to have an inspection of the building and then Dec. 31, 2026, to conduct a structure integrity reserve study.

Cassel’s prepared statement acknowledged the new financial strain that condos are facing if they are older than 30 years and stacked three stories or more.

“Florida has taken tremendous steps in the past few years to increase condominium safety and association financial health,” Cassel said. “But, we owe it to our residents to find common sense solutions to help ease financial burdens. This bill is one of those solutions. I am extremely proud to lead a bipartisan effort to reduce insurance premiums in Florida.”

The pilot project that the bill envisions, administered through the Office of Insurance Regulation, would forestall situations like one reported in the South Florida Sun-Sentinel. When Rick Engels tried to sell his late mother’s condo unit in Sunrise Lakes Phase 4 this past Summer, a prospective buyer could not get a mortgage lender willing to finance the deal.

The sale came grinding to a halt after it came out the condo association’s insurer had canceled the condo’s windstorm insurance during the middle of the just-completed hurricane season, Engels told the paper. Lenders traditionally don’t approve mortgage loans on buildings that are not insured with full replacement coverage.