Gulfshore Insurance > Gulfshore Blog > Condo Associations

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?

We have seen four years of decreasing property premiums. Property owners can thank favorable meteorological and financial conditions for this good fortune. After years of astronomically increasing rates following several devastating hurricane seasons in the mid 2000’s, inevitably what goes up, must come down. And it has. So, where do we go from here? We’re breaking down what you can anticipate in 2018  as you begin the budget planning process.

Property/Hazard Insurance Rates:

  • The trend of decreasing property rates began in 2014, continued through 2015 into 2016, and did not let up in 2017 across the board with very few exceptions (e.g. older, coastal, unprotected, no updates, etc.). The current competitive market is due to a number of favorable factors: competition with multiple new insurance markets entering Florida; record amounts of capital flowing into the insurance market; and lack of tropical storm/hurricane activity or catastrophes. Certainly, this trend cannot continue, or can it? While the competition and lack of storms is favorable for continued downward rate pressure; at this time, it is fair to say that while there is still the chance for some additional savings/decreased property premiums, it appears that it is more likely we will see the Florida property market begin to stabilize throughout 2018 or even see some pressure for small increases.
  • Our recommendation for 2018 at this time would be to budget flat to up 5% for rates, and between flat and 5% for appraisal increases. For more conservative budgeting, we recommend using a minimum of 5% for the property insurance overall premium increase due to the combination of rate pressure and inflation for construction/replacement cost appraisals.


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In 2016, five flood-related events exceeded $1 billion in losses each with total flood losses reaching $17 billion or six times greater than overall flood damage in 2015. After borrowing another $1.6 billion from the U.S. Treasury Department to supplement the losses sustained last year, the NFIP now faces expiration in September. The program was last reauthorized in 2012 after a series of lapses and extensions that left policyholders on the fence.

Given the increase in flood losses seen, many feel the NFIP is not sustainable in its current state. There is a push to move more of the flood risk back into the private insurance market, and private sector insurance companies are now coming around to the idea that offering private flood insurance policies would be a strong sector for their balance sheets. Recently, several carriers have launched private flood insurance alternatives to the RCBAP tailored to meet the needs of condo associations located in high-risk flood areas. Read more