When a condominium association needs money for an association expense such as property repairs, the association can generally divide the cost among association members and charge a proportionate amount to each member through special assessments. Many condominium unit owner policies provide coverage for some of these assessments. In fact, Florida Statute § 627.714 (2011) requires that residential condominium unit owner insurance policies include at least $2,000 of property loss assessment coverage that kicks in when an association assesses members for property damage.
Unfortunately, this loss assessment coverage doesn’t always cover all property loss assessments, as one condominium unit owner found out in the case of Grife v. Allstate Floridian Ins. Co., 493 F.Supp.2d 1249, 1251 (S.D. Fla. 2007) aff’d, 512 F.3d 1302 (11th Cir. 2008). In Grife, Hurricane Wilma damaged the plaintiff’s condominium building. The association’s insurance policy covered the damage to the building, but there was a sizable deductible to the tune of over $800,000. The association passed the cost of the deductible on to each of the unit owners through a special assessment. Mr. Grife’s personal assessment was approximately $1,200. He filed a claim to cover this expense under his unit owner policy, but the claim was denied.
Mr. Grife sued the insurance company, but the lawsuit was dismissed early on when the court found that the loss assessment provision in his policy did not cover assessments based on an insurance deductible. The loss assessment provision of his policy included what the court called a “Master Deductible” clause. Specifically, the policy provided that, “Any reduction or elimination of payments for losses because of any deductible applying to the insurance coverage of the association of building owners collectively is not covered under this protection.” The court determined that this language limited loss assessment coverage to losses under the association master policy that exceeded the master policy’s coverage limits. Procedurally, the court granted the insurance company’s motion for judgment on the pleadings. Mr. Grife appealed, and the Eleventh Circuit Court of Appeals affirmed the lower court’s ruling.
While a “Master Deductible” clause was included in Mr. Grife’s unit owner policy, it may not be found in every condominium unit owner’s policy. If you or any of the unit owners in your association have questions regarding whether loss assessment coverage will apply to your circumstances, please contact competent insurance professionals for an analysis of your specific coverage.