The tragedy that occurred in June 2021 at the Champlain Towers South, a 12-story beachfront condominium in the Miami, Florida suburb of Surfside, claimed the lives of 98 people. Since then, a Florida judge has approved a $1.12 billion settlement for the beneficiaries of unit owners and families who died in the collapse of the building. While the cause of the collapse remains elusive one year later, the full impact of the tragedy on the habitational property insurance market in Florida (which was already stressed) as well as in other states has yet to completely unfold, although some immediate repercussions have already been felt.
To begin with, the Champlain Towers South collapse serves as a cautionary tale on several levels, including when a property is not insured to its current value. According to The Wall Street Journal, the condominium association had purchased a $31.4 million Property policy for a building with 136 condo units, which was obviously not enough. Underwriters and brokers are now focusing more on insurance-to-value for condominium buildings.
Carriers are also becoming stricter regarding property inspection requirements. Older buildings, similar to the structure in Surfside, for example, will need to undergo extensive structural analysis and keep detailed records of building history and maintenance.
Property insurance rates for condos and other habitational risks continue to rise, particularly in specific markets like Florida and California. Years of costly hurricanes and wildfires, along with significant hail losses, have carriers raising pricing while others have left the Property insurance market altogether. Last year’s tragic event exacerbated the situation of getting adequate pricing to reflect the risk at hand. According to the Insurance Information Institute (Triple-I), in the past six to nine months, many master condo associations in Florida, for instance, have seen their Property insurance premiums double.
Condominium associations are also looking to layer property policies and turning to the Excess & Surplus lines market for coverage.
Importance of Risk Management
Risk management is increasingly becoming more critical, with agents and brokers assisting policyholders in mitigating potential claims. Agents and brokers can provide habitational/condo association clients with systematic risk mitigation advice, send reminders of routine maintenance practices, and recommend additional insurance coverage. The Surfside collapse is a wake-up call that illustrates how insureds can genuinely benefit from being reminded of their responsibilities to HOAs or condos regarding coverage and maintenance.
Seneca’s Property Solutions for Condos
The Seneca Insurance Company Excess & Surplus Lines Property team offers insurance for condominiums, among other habitational classes. We provide full-limit and primary loss-limit policies, excess layers, and limits up to $75 million per location. All risks are subject to an inspection, and the availability of catastrophe perils varies based on the location of the condo and its risk characteristics.