I remember a day not too long ago when every property was inspected before an insurance policy was issued, and annual inspections were mandatory. I’m sure that everyone remembers when insurance companies stop requiring those inspections. Funny how a classic can return into vogue. Today insurance companies are hiring property inspectors daily. Property inspections are so important now that the same properties are being inspected by different inspection companies with those inspections ordered by both the insurance agency that soldier the policy and the insurance carrier. And now the new Florida Building Safety Law, (aka) Champlain Towers Law, SB4D, or Sunrise Law, has everyone’s attention, searching for an engineering firm to inspect their buildings, and worrying about the deadlines the new law has declared, that probably cannot be met. There is simply not enough “inspectors” of any kind to handle the new demand.
Insurance companies are doing this primarily to make sure that the coverage limits on the policy are accurate regarding the property’s value. Each policy requires a homeowner or a community association to insure their property to a minimum of, for example, 80% of what it would cost to replace the building. Different carriers and different policies offer variations of this percentage.
They’re also looking for property condition. They want to make sure that the property owner is keeping up the property in good condition. They’re looking for structural defects, cosmetic defects, and anything that would take away from the property’s value. They look for liability situations. This is a big concern because a simple trip and fall or slip can cost them thousands of dollars in legal fees and settlement costs and court costs if it comes to that, defending the Association or the building owner.
Even though they send out a building inspector, they do not assume the liability for the inspection. It is ultimately the building owners responsibility to make sure that the building is kept up structurally and to make sure that it is safe. If you have a wood deck, for example, in the boards are turning up on their edges, and the screws or nails are rusting, rising up from the deck surface, boards are warping and turning up creating an uneven surface, and splinters are showing up, do the smart thing and perform the required maintenance needed. It is very common and very easy to think that the insurance company will soon simply defend you and pay the settlement and the cost, with no out-of-pocket on your part. You are assuming the insurance carrier will not claim you were negligent in your duties. That may be true this time. But consider this. At the time your policy renews, and you have paid losses showing up on your loss history report, that they will think twice about renewing a policy. When you shop that policy, the odds are you will pay much more, tens of thousands more, than you’re paying now in annual premiums all due to the fact that you did not invest perhaps less than $1000 in proper upkeep of that boardwalk. This same scenario can apply to walkways, elevators, stairs, pool decks, pool fences and gates, and a host of other areas.
And now, with the newly passed into law Florida Building Safety Law, (aka) Champlain Towers law, or Sunrise law, insurance companies are looking hard into requiring your full and complete compliance with that law to even think about insuring your community association, condominium, or HOA. Their inspectors are not trained in structural defects, and how to recognize them. The new Law now requires your community association, board of directors (and manager), to hire a licensed engineering firm to inspect the building, offering different time frames, depending on age and location, proximity to coastal waters. It is easy to assume the insurance carrier will want a copy of that inspection report. So not only are lawmakers requiring your board of directors to make sure your building is fully and completely inspected for structural defects, but other very important eyes are looking for your compliance also. As I have stated, this new law is only the start of the commerce generator machine this will cause. After all, your community association has to have a master policy covering the common elements. Yes, each homeowner will have their own contents coverages. But, if the association fails to obtain insurance at a reasonable market rate due to their lack of compliance with the law and the requirements of the insurance company, every one of your community’s members with a mortgage is going to ask for proof from you that you have placed that insurance. Otherwise their mortgage holders will cry foul, and threaten to call the notes due. Additional eyes are looking also, including the local building official.
Liability compliance, and self-governing that function of your board, and being proactive to that regard, is now not optional. In fact, it is a wise thing for you to perform your own liability checks, sing your own eyes and judgement to evaluate the building’s condition. Even if the new law does not require an inspection, do one anyways. By hiring the right professional to give you reported conditions, you can properly identify the areas that an insurance company would be concerned about, and repair those areas in advance of an insurance inspection, or an inspection by a structural engineer. This will not only make a property safer for your members and guests, but it let you sleep at night that you’ve done the right thing and that you were not negligent in your duties as a board member.
