It was winter of 1996 when my family and I moved from New Jersey to Puerto Rico. Since then, I have witnessed how Puerto Rico has struggled to establish better construction codes and plans for home improvement and insurance. These attempts have been challenged by politics, economic issues and natural disasters. Puerto Rico does not have statutes or ordinances requiring homeowners to have property insurance; it is only a requirement for property owners with mortgages. Puerto Rico’s Insurance Code defines insurance as “the contract whereby a person is obligated to compensate another or to pay or to provide a specific or determinable benefit to the occurrence of an uncertain event foreseen there, the term safe includes reinsurance.”1
The 2010 census revealed that the Island has 1.6 million homes. The Insurance Commissioner of Puerto Rico, Javier Rivera Rios, stated that currently only 30% of the homes in Puerto Rico are insured.2 This represents a great obstacle for repairs and recovery after Hurricane Maria. Puerto Rico authorities estimated that a total of 250,000 homes suffered severe damages and 200,000 other homes suffered minor damages.3
Repairs and reconstruction are essential after catastrophic events such as Hurricane Maria. Puerto Rico’s 2003 Condominium Act provides coverage to protect common areas and other common benefits for the titleholders, including those that possess their own insurance. “Common areas” are considered as general common elements necessary to the condominium structure, not susceptible of individual ownership by the holders and subject to a legal compulsory unity, such as hallways, courtyards, stairwells, and lobby.4 Titleholders are required to pay communal insurance to the Board of Directors, even if the titleholders buy insurance for their apartment or have paid their mortgage. Any owner may request to inspect documents relating to communal insurance. All titleholders should inform the Board of Directors of the conditions and repairs needed in their apartments and common areas after damages occurred. The Board will then inform the insurer of all reconstruction needed and the indemnification process will begin.
After receiving an indemnity offer from the insurer, the board of Directors will prepare a distribution plan for the reconstruction funds, detailing the specific amounts to be allocated to the Reconstruction of each apartment, according to the appraisals carried out, and the other common areas of the property.
The report shall be circulated to the holders not less than fifteen (15) days prior to the holding of an extraordinary assembly, convened to consider, exclusively, the offers presented and the report. The Board of Trustees shall finally decide, by majority vote, everything related to the indemnity, including acceptance of the sums offered by the insurers companies and the priorities of the works to be carried out.5
If the condominium is not insured or the indemnification does not cover the total value of the reconstruction, the Condominium Act provides the following article:
When the property is not insured or the indemnity of insurance does not reach to cover the value of what needs to be rebuilt, the new cost of construction will be paid by all the owners who directly affect the damage, in provide the percentage of their respective apartments; And if one or more of those who integrate the minority refuse to do so, most will be able to do so at the expense of all, as soon as the works benefit them, taking the appropriate agreement, which will fix the particulars of the case and include the price of the works with intervention of the Council of headlines. The provisions of this article may vary by unanimous agreement of the interested parties, adopted after the date on which occurs the claim.6
In the last decade, natural disasters have increased and caused major damage and loss all over the country. Property owners should be strongly encouraged to purchase insurance coverage in Puerto Rico and other vulnerable areas. Property owners, are responsible for choosing insurance coverage wisely and complying with all policy. We must continue the efforts to secure and protect our homes against natural disasters, such as Hurricane Maria.
1 Puerto Rico Insurance Code, 26 L.P.R.A. §102.
2 Benjamin Torre Gotay, Minima la Cantidad de Casas Aseguradas (Last updated: November 20, 2017) http://www.elnuevodia.com/noticias/locales/nota/minimalacantidaddecasasaseguradas-2375728/.
3 Benjamin Torre Gotay, supra note 2.
4 2003 Condominium Act, 31 L.P.R.A. 1291i.
5 2003 Condominium Act, 31 L.P.R.A. §1293h.
6 2003 Condominium Act, 31 L.P.R.A §1293i.