If you are a member of a Florida condominium association’s management team or board of directors, you should consider building code coverage. This form of additional coverage provides security against the substantial financial costs associated with bringing a covered structure like a condominium building into compliance with building codes when a property is damaged. When an association does not possess this form of coverage, the financial consequences can be devastating even after minor damage to the premises. Depending on the circumstances, the association might be forced to incur millions of dollars in expenses to bring the property into compliance with applicable building codes even when only minor repairs would otherwise need to be undertaken.
A recent appellate court decision, Axis Surplus Insurance Company v. Caribbean Beach Club Association, illustrates the importance of this form of insurance coverage. The basic policy purchased by the association did not cover extra costs incurred to comply with building codes. However, the insured purchased additional coverage in the amount of $2.5 million for the increased cost of construction involved in conducting repairs in accordance with applicable building codes.
While we have previously written about this case in terms of the appellate court’s ruling that the insurer waived certain timing requirements, we focus here on the benefit of this special form of coverage for the association. The building suffered significant damage from fire. Because Caribbean purchased this supplemental form of coverage, the insurance company was compelled to cover the increased cost of $1.8 million to bring the building back into compliance following the fire.
Situations frequently arise like the one in this case where substantial building code requirements can greatly inflate the cost of repairs. A common example is the one in the Caribbean Beach Club case where the building had to be elevated to comply with flood elevation requirements. The potentially enormous costs associated with this type of increased cost of construction typically justifies the cost of code coverage.
Condominium association boards and their management personnel should ask their insurance broker whether they have code coverage and the applicable policy limits. The cost of repair can be staggering when a building needs to be raised or other significant code issues must be corrected. Associations might want to obtain code coverage or raise their policy limits. In the case of Caribbean Beach Club, code coverage saved the association $1.8 million.
While the focus of this blog post is on condominium associations, homeowners similarly can benefit from code coverage. Whether you are a homeowner or condo association board member, you should have your legal counsel review existing building code compliance issues to determine if this form of additional coverage would be beneficial.
If you are a condominium association that is struggling to get your policy claim covered, my law firm might be able to help. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.