When damage occurs in a condominium unit, there are often many questions as to whose responsibility it is to pay for the loss. Many times, there is a lot of confusion over which insurance policy should pay for the loss. Losses caused by plumbing leaks or water intrusion often damage multiple units on various floors, as well as common elements owned and maintained by the Condominium Association. Further, you may have a claim involving water leaking through windows or balconies and an insurance company that denies coverage because exterior windows and doors are the responsibility of the Condominium Association and are, therefore, excluded from your unit owner coverage. There can also be plumbing losses that originate from another unit and that cause water damage to your unit or common elements. So, which policy should cover the loss? The Condominium Association’s policy, your unit owner’s policy, or the policy that covers a different unit if the water originated in another unit in the building?
Most often in these situations, there is a lot of finger pointing between condominium unit owners and their insurers and the Condominium Association and its insurer. The policies are often vague as to what is covered as part of the “unit” and what is covered as part of the “common elements.” Insurance carriers will attempt to pass the responsibility onto each other.
When the insurance carriers start pointing their fingers at each other, an attorney’s involvement will be required to analyze the insurance policies involved as well as the Declaration of Condominium and the Bylaws to determine which insurance company should respond for the damage.
The confusion in this circumstance arises because there is no specific list of items that the unit owner’s policy covers. The scope of coverage afforded by a typical unit owner’s policy (HO-06) includes the following:
We cover the portions of the building “which are your insurance responsibility under a corporation or association of property owner’s agreement” or declaration of condominium.
Since each and every Declarations of Condominium and the Bylaws in Florida are free to define the terms “unit” and “common elements” in different ways, it means that each claim made under a unit owner’s policy has the potential to cover different items within the unit. The same goes for any claim brought under the Condominium Association’s policy. It all depends on who has the “insuring responsibility” for the damaged item under the policy and under the Declaration of Condominium and Bylaws.
In 2008, Florida Statutes were amended to attempt to address this confusion, but today unit owners and Associations are more confused than ever before. In 2008, Florida Statute §718.111.11 was amended to include requirements for what should be covered under the Association’s building policy and what should be covered under the unit owner’s policy. However, several gaps and unanswered questions remain.
The statute provides that building hazard coverage insurance (Condominium Association policies) “shall exclude all personal property within the unit … and floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any of the foregoing. See Florida Statute §718.111.11(f). However, although Florida Statute §718.111.11 tried to limit the Association’s building coverage liability, there are still a lot questions left unanswered. The statute does not address interior drywall, interior, non-load bearing walls, interior and exterior doors, and windows, to name a few.
The problem herein lies in the definition of “unit” in Declaration of Condominium and Bylaws, which differ by Association. Sometimes, the definition of what is considered the “unit” is relatively short and straight forward, i.e. the Perimetrical Boundaries definition and the Pocket of Air definition. Perimetrical Boundaries means the outer boundaries of the unit. The Pocket of Air definition implies that everything within the boundaries of the unit are considered part of the “unit”. In this case, the definition of “unit” would also include drywall, interior doors, and interior non-load bearing walls, or partitions.
Sometimes, the definition of the “unit” in the Declaration of Condominium and Bylawas is more precise to include “the interior unpainted finished surfaces of the ceiling, floor and perimeter walls. All bearing walls located within the unit are common elements…All doors which are in the perimeter walls are a part of the unit up to the exterior unfinished surface”. In this case, windows and doors to the exterior are considered part of the unit, and not a common element. In a case styled, In Royal Bahamian Ass’n v. QBE Ins. Corp., 2010 U.S. Dist. LEXIS 142513, 27-28 (S.D. Fla. 2010), a District Judge determined exterior windows were unit owner responsibility when “unit” was defined this way in the Condominium documents.
However, in another case, Mayfair House Ass’n, Inc. v. QBE Ins. Corp., 2008 U.S. Dist. LEXIS 66456, 7 (S.D. Fla. 2008), the Court found that windows, while not considered a common element, may still be considered part of the building structure, and therefore still properly fall under the Condominium Association’s policy.
Right now, there are no easy answers and there is no “blanket rule” on which policy covers damage to a condominium unit in the event of a loss. Property insurers are likely to point to Florida Statute §718.111.11 as a way of limiting their liability, but the analysis is not that easy and does not stop there. There may be coverage for some portions of the “unit” under the Condominium Association policy. However, there may also be coverage for some portions of the “unit” under the unit-owner policy. A full analysis of all the available policies, the Declaration of Condominium, and the Bylaws should be made on a case-by-case basis when attempting to determine coverage.
By statute, a unit owner can obtain a copy of the Declarations of Condominium and Bylaws from the Condominium Association upon request. Declarations of Condominium and Bylaws are also recorded in the public records and can often be accessed via a county’s Public Records website. Review of your own unit owner’s policy, the Condominium Association’s policy, other at-fault unit owners policies, the Association’s Declarations of Condominium and the Bylaws by a seasoned property insurance attorney should resolve any issues regarding which insurance policy should respond in the event of a loss to your condominium unit.