Condominium associations and their board members are required by Florida statute to obtain adequate property insurance for full insurable value. Most associations therefore purchase Commercial Property policies to cover risks, such as fire, lightning, and wind. However, many of these policies exclude coverage for new building ordinance or law requirements, because in the insurance company’s mind this would put the association in a better place than they were before the loss.
For an additional premium many carriers will offer what they call Ordinance or Law coverage, which provides the association the option to purchase coverage for 3 types of building ordinance or law requirements. These requirements would apply after a physical damage loss, such as fire, lightning, or wind.
Coverage A: Loss to the Undamaged Portion of the Building
These coverages are best explained through example, so let’s provide one for you. As a result of a unit owner forgetting to blow out a candle at night, your association sustains a large fire. The fire results in destruction of 60% of the building. The other 40% shows no sign of loss. This coverage would pay to rebuild the undamaged 40% of the building if the municipality advised your association that the entire building had to come down.
Coverage B: Demolition Cost Coverage
This coverage pays for the demolition of the undamaged portion of the building. In the above example, this would pay for the 40% of the building that was undamaged as a result of the fire.
Coverage C: Increased Cost of Construction
The older your building is the more important Coverage C is. Coverage C pays for the increased cost of construction due to new ordinances or laws. For example, when your new condominium is built after the fire it now must be ADA compliant and may require impact resistant windows if located near the coast.
Now that you understand the importance of Ordinance or Law and the coverages that are included, the question is, “How much insurance coverage does your association need?” You can usually select a limit for each coverage, but the most common way to add coverage is to purchase full Coverage A and a combined limit for Coverage B and C. That limit is usually a percentage of the building cost (such as 2%, 5%, or 10%). When determining a limit, it is best to include your insurance agent in the conversation.
About Michael Wagner Insurance Agent 727-557-9993
Highly accomplished, visionary executive with proven ability to impact financial, social, and political goals through commitment to global issues, innovation, and diversity. Results-oriented, decisive leader offering 15+ years of success in sales, operations, and marketing. Deliver excellence in execution and developing people, utilizing international / multicultural experience to provide unique perspective and creative solutions, achieving high performance within diverse organizational cultures. Demonstrate rapid advancement based on high performance, with the ability to quickly transfer skills across industries. Self-starter with strong entrepreneurial spirit, high integrity, and solid work ethic; creative, highly analytical, and able to successfully manage multiple concurrent projects with keen attention to detail, excellent organization, and outstanding persuasive skills. Able to skillfully inspire, motivate, and lead teams for consistently winning outcomes.
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