Condominiums, Cooperatives, Homeowners Associations, and Timeshares

It can be very confusing, even for a seasoned agent, to determine which insurance statutes apply to each type of association.  When analyzing the statutory and insurance coverage issues the first stop must be the bylaws and documents of the association.  This is the only true way to determine the type of entity you are dealing with.  If the proper insurance policy is not used to cover the entity, it is like giving a doctor a hammer when they asked for a scalpel.  Not knowing the correct type of legal entity you are dealing with can lead to potentially serious insurance gaps when claim times come.

Condominium Associations

Chapter 718 of the Florida Statues addresses condominium associations.  The statues in this chapter are designed to dictate what the association’s master policy does and does not cover.  Over the years there have been several amendments to the language within the Statues. 

When a Condominium Association is looking to purchase property insurance, they would purchase the CP 00 17 – Condominium Association Coverage Form.  This form applies to both residential and non-residential condominium associations.    There is a mandatory endorsement, CP 01 91 that is attached to all residential associations.  This endorsement defines the associations building coverage and it is added to make sure that the policies comply with Florida Statutes 718.111(11).  The unit owner in a residential condominium association would then buy a HO-6 policy, while a non-residential unit owner (commercial condominium) would purchase a CP 00 18 – Condominium Commercial Unit Owners Form.  Both of these policies are designed to work with the master associations’ policy by covering the items the master policy will not.

When it comes to flood insurance the residential condominium association would purchase the Residential Condominium Building Association Policy (RCBAP).  The non-residential condominium association would use the General Property Form to provide coverage for the building.  Both policies have limitations as to the amount that they can cover per building.

Cooperatives

Chapter 719 of the Florida Statues deals with the Cooperatives.  Nothing contained in Chapter 718 applies to a cooperative association.  One of the problems with this particular Chapter is it makes little if any reference to insurance.  This makes it all the more important that the bylaws of the association are consulted when deciding on insurance coverage for this type of association.

To make sure that the association has the proper coverage the CP 00 10 – Building and Personal Property Coverage Form should be used.  Under no circumstances should a cooperative association be written using the CP 00 17 Condominium Association Coverage Form.  Doing so could have serious insurance complications.  Similar to the condominium associations a unit owner would purchase a HO-6 policy to protect the interior of their unit.

As you may have guessed at this point, the flood insurance is again different.  A cooperative association should use the General Property Form, subject to a maximum limit per building of $500,000 for the building and $100,000 in contents coverage.  A cooperative does not qualify for the RCBAP

Homeowners’ Associations

Chapter 720 of the Florida Statutes covers homeowners’ associations and is silent on insurance issues.  This is another type of association where it is important to consult the bylaws when deciding on insurance coverage.  Nothing contained in Chapter 718 applies to homeowners’ associations.

For property insurance, the correct form to use is the CP 00 10.  The CP 00 17 is not intended to insure a homeowners’ association.  The individual owners can buy either an HO or DW policy form, however, an HO-6 is technically not permitted under ISO rules and the use of such can lead to potentially serious problems.  There is one exception to the rule.  If the units are attached (townhouse or rowhouse) the bylaws may allow the association to purchase a “master” type policy to insure the building as a whole.  The CP 00 10 is still the correct form that should be used.

There have been many instances over the years that the National Flood Insurance Program (NFIP) has made it clear that the use of the RCBAP is not permitted for a homeowners’ association.  The homeowners must buy their own Dwelling Form policies on their property, subject to the maximum of $250,000 for the building and $100,000 for the contents.  Recently private flood carriers have been an option for the individual units or a “Master” type policy for attached buildings.

Timeshares

Chapter 721 of the Florida Statutes addresses timeshares.  This Statute makes very little reference to insurance, other than to state in F.S. 721.165, “…the managing entity shall use due diligence to obtain adequate casualty insurance as a common expense of the timeshare plan to protect the timeshare property against all reasonably foreseeable perils, in such covered amounts and subject to such reasonable exclusions and reasonable deductibles as are consistent with the provisions of this section."

Nothing is Chapter 718 applies to timeshares.

When insuring the property, the association should use the CP 00 10.  The CP 00 17 is not designed to properly cover this type of association and should not be used.  If an individual purchase a timeshare they should alter their primary homeowners policy to address their need for additional coverage.

The type of flood policy used would depending on how the timeshare is organized.  If it is a “timeshare condominium” then the RCBAP policy should be used.  If not then the General Property Form is used with a maximum limit of $500,000 per building.  Individual owners can purchase flood policy using the Dwelling Form and can purchase contents only.