Citizens Insurance Company, known as the insurer of last resort, lawfully escaped providing coverage for what, at least one condominium association believed, was properly insured property under the association’s casualty policy. Just weeks after the Third “District Court of Appeals” (the “DCA”) ruled, in the Aventura case, that third party bidders do not have to pay assessment arrearages in response to a first mortgage foreclosure where an association has first acquired title to the unit by foreclosing its own assessment lien, the Fourth DCA just reversed a trial court’s decision where the trial court had decided that Citizens needed to provide coverage in favor of the association for “all property located outside the unit and all portions for which the declaration of condominium required coverage.”
On April 10, 2013, the Fourth DCA, in Citizens Property Insurance Corporation v. River Manor Condominium Association, Inc., held that merely because the Association’s insurance policies contained a provision requiring that the policy be amended “to conform to any conflicting statutes of the State where the property is located” did not mean that Citizens was required to provide such coverage as required by the 2005 version of section 718.111(11), of the Florida Condominium Act.
In this case, Citizens agreed to pay the insured, River Manor Condominium Association, Inc., only for those specific items set out in the policy, but not for the additional items as set out in section 718.111(11), Florida Statutes, which, in 2005, provided:
“Insurers issue insurance policies for all portions of the condominium property located outside the unit, and all portions of the condominium property for which the declaration of condominium requires coverage provided by the association.”
The River Manor Condominium Association, Inc. argued that application of section 718.111(11), Florida Statutes, to the plain meaning of their Citizens insurance policy meant that Citizens was obligated to insure every part of the condominium as required by the 2005 statute. The trial court agreed and granted “summary judgment” (no material fact at issue and the moving party is entitled to judgment as a matter of law) in favor of the Association. However, the Fourth DCA held that the text at issue in the insurance policy did NOT create any obligations on Citizens to provide such coverage as set in section 718.111(11).
Because the issue under consideration by the Fourth DCA invoked a matter of statutory interpretation, its level of review was, what lawyers refer to as, “de novo.” This type of review allows the appellate court to review the entire lower court record anew, as if it were the first time all over again. The result being that the appellate court can substitute its judgment for that of the lower court, and that is exactly what they did!
The moral of this horrible tale is quite simple. Even though today’s version of section 718.11(11), Florida Statutes, pertaining to this issue is very different, if your association’s insurance policy has a clause similar to the clause in River Manor’s policy, then in all probability your association might not have the coverage you think it does. It’s a good time to review your community association’s insurance policy with the association’s insurance agent or attorney.
For contrast, the current version of section 718.11(11), of the Condominium Act, provides, in relevant part, that:
(f) Every property insurance policy issued or renewed on or after January 1, 2009, for the purpose of protecting the condominium must provide primary coverage for:
- All portions of the condominium property as originally installed or replacement of like kind and quality, in accordance with the original plans and specifications.
- All alterations or additions made to the condominium property or association property pursuant to s. 718.113(2).
- The coverage must exclude all personal property within the unit or limited common elements, 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 which are located within the boundaries of the unit and serve only such unit. Such property and any insurance thereupon is the responsibility of the unit owner.
Since the River Manor court also held that “the Condominium Act regulated condominiums, – not insurance companies,” if your association’s insurance policy does not mirror the current version of section 718.11(11), and/or contains language similar to the text contained in the River Manor policy (regarding “conforming the policy to existing law”), then the association needs to address the situation sooner than later…. now.