The Condominium Act in Florida states that insurers must cover damage to the exterior common elements. However, the 4th District Court of Appeal recently held that associations cannot rely on that provision to cover damages to those areas.
In a recent dispute between Citizens and River Manor Condo Association, Inc. (“Ass’n”) in Wilton Manors, the Court reversed $1.24M of a $6M damages awarded to the Ass’n for damages caused by Hurricane Wilma in 2005.
Citizens argued that structures and landscaping separate from the buildings was excluded from coverage. In response the Ass’n cited the section in the Condominium Act that requires coverage for those damages. The Circuit Court Judge found conflict between the policy exclusions and the Act and found for the Ass’n.
The 4th District panel looked at the legislative intent and insisted that the Act was created to regulate associations not insurance companies because a subsection in the Act requires associations to use their “best efforts” to obtain such coverage and if the Act regulated insurers the subsection would be meaningless. However, the panel agreed that the “best efforts” language is ambiguous, and could lead to negative consequences in future application.
The Court interpreted the statute to mean that an association should use its best efforts to obtain insurance that covers the exterior elements of common areas but implicitly recognizes that due to market constraints this may be impossible. This means that insurance policy exclusions strictly construe the coverage of the association’s property and the association may not rely on the section of the Condo Act to “extend” coverage to those areas.