Navigating Florida’s Challenging Property Insurance Marketplace for Community Associations

Laura Manning-Hudson
October 23, 2023


The property insurance crisis in Florida is causing significant upheaval among the state’s HOAs and condominium associations.  While they are paying the highest premiums in the country for coverage, more than 15 insurers have left the state in recent years.  Citizens Property Insurance, the state-backed “insurer of last resort,” is Florida’s largest property underwriter, and it and the state’s other carriers insist that the risks from hurricanes and climate change are too much for them to bear.

In response, the state legislature earlier this year adopted several significant reforms championed by the insurance carriers.  These include the prohibition of assignments of benefits, which the industry says incite inflated estimates by contractors reflecting overcharges and unnecessary work.  Lawmakers also eliminated bad-faith claims filed by policyholders that are based on the appraisal award/acceptance of judgment, and they enabled insurers to include mandatory binding arbitration for dispute resolutions as part of their policies if they also offer a coverage option without this provision. 

Florida condominium associations are required to maintain adequate coverage to protect the association property and community common elements, and their board members have a fiduciary responsibility to secure the coverage.  

Optional, but very highly recommended, is liability insurance for directors/officers/employees of the association.  Directors and Officers Liability Insurance (aka D&O insurance) serves to defend and protect directors from lawsuits.  Officers and directors are also shielded by indemnification provisions of the Florida law governing not-for-profit corporations as well as the articles of incorporation of their association, but the D&O insurance should also be considered essential.  It provides effective protection for directors from personal liability for monetary damages for any statement, vote, decision, or failure to act to the extent they were carrying out their duties as directors of the association.

For the most part, Florida community associations and their boards of directors are cognizant of the financial hardships being caused by rising insurance costs and the corresponding increases to owners’ monthly dues.  However, going without adequate property coverage is simply not a permissible option under state law, so associations have no choice but to secure the coverage and have all the owners pay their fair share.  

It is too soon to tell whether this year’s reforms will have a significant impact, and insurance rates for associations as well as practically all Florida property owners are expected to continue rising in the immediate future.  For associations and boards of directors in search of areas in their annual budgets where they can cut costs, insurance is very unlikely to be one of them in today’s market.  The best approach is to work with highly reputable and experienced insurance agents and brokers to secure the best possible terms on the exact level and types of coverage needed for each community.

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