Gulfshore Insurance > Gulfshore Blog > Condo Associations

The growing use of drones by consumers across the U.S. is leading to the adoption of new rules and restrictions by not only government, but also private organizations such as community associations.  Questions regarding safety, property damage, and privacy abound with drones, and associations are responding by establishing clear parameters for their use by unit owners.

Can associations prohibit drones from flying over their property? If a drone operated by an owner or a business falls on another owner’s car, will the board be liable for the damage? Should boards themselves use drones to patrol common areas and spot rule violations? If they do, how should they manage the information and images they collect? How will boards balance the privacy concerns of owners and the desire of others to operate drones and/or have them deliver pizzas and packages to their homes?

These are just some of the questions boards will have to address. While it is too soon to offer definitive answers, a few preliminary observations may help frame the issues.

  • Boards have the authority to adopt rules banning drones in common areas, and some association attorneys think they should do so proactively. Their concern: Boards that don’t control drones now may lose the ability to do so if federal or state laws or regulations broadly permit their operation.
  • Instead of banning drones entirely, which will upset some owners, boards could consider regulations limiting their size or specifying where and when they can land in common areas. Although associations can’t ban the ownership of drones, they can prohibit drones from flying within a specified distance of owners’ units or require drone operators to obtain permission from residents before photographing them or their property.
  • The liability concerns surrounding drones will be large and complicated. Insurance companies are just beginning to evaluate the risks and opportunities in this emerging market. Boards should check with their insurance agents to determine what their existing policies cover and what additional coverages they may need.
  • Even if boards aren’t yet ready to act, they should start discussing policies, procedures and regulations governing drones before they begin fielding the inevitable questions, complaints and law suits related to them. Two years ago, we would have said that drones are coming. Today, we have to say, they’re here. The challenge for community associations is finding ways to live with them.

If an association concludes that it wishes to permit the operation of drones in the community, it should consider the adoption of rules and restrictions to help ensure safety.  These include the establishment of designated take-off/landing sites, restricting their use to daylight hours, developing penalties for violations, and clarifying that the association is not liable for any property damage caused by these aircraft.  Additionally, the association board or management should consult with its insurance agent or consultant to confirm that it is adequately insured with regard to the risks that may be presented as a result of the use of drones at the property governed by the association.

Recently, Legionnaires disease hit the headlines when an outbreak occurred at a southwest Florida condominium. Many community associations are now asking whether they have the proper coverage in place to protect themselves if a similar situation were to occur in their neighborhood.

What is Legionnaires Disease:

Legionnaires disease is a type of pneumonia caused by legionella bacteria. Legionella is a type of bacterium found naturally in freshwater environments, like lakes and streams. It can become a health concern when it grows and spreads in human-made water systems like showers and faucets, cooling towers (air-conditioning units for large buildings), hot tubs that aren’t drained after each use, decorative fountains and water features, hot water tanks and heaters, and large plumbing systems. The disease doesn’t spread from person to person. Instead, Legionnaires’ disease is contracted by breathing in mist, steam, or vapor that has been contaminated with the bacteria. “One example might be from breathing in droplets sprayed from a hot tub that has not been properly cleaned and disinfected,” reports the CDC.

How to Protect Your Association:

When people are infected with legionella from an establishment, its owners and/or operators can be held liable for victims’ physical and financial suffering. Since just one uninsured lawsuit can be enough to cause financial jeopardy, having Environmental Impairment Liability insurance should be considered a cost of doing business. General Liability (GL) coverage for community associations broadly excludes pollutants and bacteria; therefore a standalone Environmental Liability policy is needed to supplement these exclusions. Environmental Liability coverage is broadly available and generally inexpensive, however forms vary greatly from one carrier to another and not all policies cover this exposure. It is therefore very important that you review the policy terms and conditions with your Client Advisor to ensure that there are no exclusions for this exposure from your policy,

These outbreaks again illustrate why communities need to do their best to prevent illnesses from the legionella bacteria, and be properly insured in the event that they occur.

Update: Governor Rick Scott  recently  signing SB 841 into law that makes additional changes to the website requirements added to FL Chapter 718 in 2017. The bill includes an extension of the deadline from July 1, 2018 to January 1, 2019. You can download a copy of the bill from the Florida Senate website here.

Posted Earlier: By July 1, 2018, a Florida condominium association with 150 or more units (which does not manage timeshare units) must have an independent website or web portal wholly owned and operated by the association or a website or web portal operated by a third-party provider.

At present an association with less than 150 units is not required to comply with the new statute; however, it is possible for this to change at any time. It is important for impacted associations to start evaluating options for compliance sooner rather than later.
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The National Flood Insurance Program (NFIP) just announced changes effective April 1, 2018 and January 9, 2019. The changes outlined below apply to new business and renewals that will become effective on or after April 1, 2018. The premium changes for Preferred Risk Policies (PRPs) and Newly Mapped procedure policies will become effective January 1, 2019.
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What happens when an association encounters large or unexpected expenses? For example, if the clubhouse roof starts leaking, the pool needs resealing, or worse. Where does the association get the money to repair or replace these? At those times, the association’s reserve fund comes into play.

Adding money to your Association’s reserves is a tough sell to members. However, the reality is that many associations (upward of 70%) are woefully undercapitalized. They can pay the day-to-day bills as long as nothing unexpected happens, but something always comes up.

Every community association should have money set aside “in reserve” to cover the cost of emergencies or major repairs. Reserves are — or should be — an essential part of every community association. An undercapitalized association with inadequate reserves will have no choice but to hit owners with a nasty assessment, increase contributions substantially, borrow money to meet the cash flow shortfall, or some combination of these three options.

There are three requirements for reserves for condo associations – roofs, paving and painting, plus any item that is deemed to be over $10,000 to be replaced. Aside from the three mandatory requirements, you should consider reserves for uninsured/underinsured items, such as landscape and large deductibles.

Typically (that is a dangerous word), most condominium associations should be setting aside 15% – 40% of their assessments towards reserves.

This ratio is lower for associations where each homeowner maintains their own home and the association only is responsible for some minimal common areas.

Obviously, every association has its own unique list of common area assets it is responsible to maintain. Some may have a longer list that force higher reserve contributions (pool, elevator, tennis court, balconies, wood siding, etc.), some may have shorter lists of amenities or more cost-efficient exterior finishes.

Reserves should be capable of covering all known liabilities that the regular budget doesn’t specifically cover.  If another hurricane were to tear through the area tomorrow and you lost nearly everything, what would the association have to come up with to cover it all?