House Bill 601, passed by the 2008 Florida Legislature, broughta number of notable changes to Chapter 718 of the Florida Statutes— and not a little controversy. One of the most contentious of thechanges to the condominium statutes was the one requiring that "Theassociation must be an additional named insured and loss payee onall casualty insurance policies issued to unit owners in thecondominium operated by the association."

Since the bill's passage, rumors have abounded that itsrequirements didn't have to be observed, were superseded, or wouldbe changed. To separate real from rumor, Florida Underwriter spokewith David Thompson, CPCU, AAI, API, and an instructor with theFlorida Association of Insurance Agents (FAIA).

Thompson assured us that House Bill 601 is for real – untildealt with in the 2009 session by a possible "glitch" bill, andanswered some of the recurring questions.

Q. Your research has shown that agents have multiple questionsabout HB601, from how to correctly fill out the forms, to thelegislative intent of the bill, to how to properly adviseassociations and unit owners on coverage details. The Office ofInsurance Regulation (OIR) has offered language to try to clarifysome issues. What is the latest information you can share aboutHB601?

A. The bill is law — unclear as it may be. We at FAIA areactively working with the major players involved in the wholecondominium insurance issue on a bill that will clarify, change andeliminate some of the problems associated with HB601. That bill,however, won't even be introduced until the 2009 regular session,so it's almost impossible for any statutory changes to take placebefore about July. I'd stress again — HB601 is the law.

Q. A change that took effect Jan. 1 requires special assessmentcoverage. Can you explain that in greater detail?

A. You won't find the term "special assessment" in a homeowners'policy; you find "loss assessment" coverage. In a letter toInsurance Commissioner Kevin McCarty, the bill's sponsor, Sen.Dennis Jones (R-Seminole), stated that the "intent" of theLegislature was, in effect, to require that the typical HO-6 typeunit owner's policy include $2,000 of loss assessment coverage.Most policies today come with only $1,000, although a few carriersissue the policy at higher limits. Most insurance professionalsfeel that if the policy includes at least $2,000 of loss assessmentcoverage, then the "intent" of the Legislature has been met. Thisis an issue we are working on in the proposed 2009 bill.

Q. Given today's real estate market, do you get a lot ofquestions regarding the mandatory "independent insurance appraisal"that is now required of condo associations every 36 months?

A. The questions typically involve only issues like what theterm means and what meets the statutory requirement. Some carriersalready require this, so it's not been a huge issue.

Q. Did the new statute change how the condo association'sdeductible is determined?

A. The association still selects the deductible. The statutesays that the deductible (I'm paraphrasing here) must be consistentwith other similar condominiums, and must be selected after lookingat the available funds on hand, combined with the assessmentpotential. The deductible must be selected by the board at ameeting open to all members of the association.

Q. Have you been hearing that the changes in the statutes havemade it tougher for condo association boards to know what theirresponsibilities are and what coverages they now need?

A. No doubt, associations are puzzled over what theirresponsibility is when it comes to unit-owner coverage. We adviseour members that if an association asks them what to do, theinquiry should be referred to the association attorney. Theassociation or unit owner has to request coverage; it's the agent'sjob to place the coverage requested, not select it.

Q. How do you think the implementation will play out regardingHVAC (heating, ventilation and air-conditioning) equipment that nowis not being excluded in association master policies?

A. One key point is that the statute addresses insuranceresponsibility, not the responsibility to maintain. A worn out HVACunit in need of repair or replacement is not an insurance issue,and shouldn't be addressed by an insurance professional. Theassociation clearly needs to advise the agent how much to increasethe master property policy to account for the HVAC equipment.Failure to do so could result in a coverage shortfall and/orcoinsurance penalty. It's not the agent's job to select anincreased amount of coverage.

Q. Of the 2008 changes, which one is causing the mostconfusion?

A. Clearly the "additional named insured" requirement on theHO-6 policy is the most troublesome issue. Companies are all overthe map on how they are handling this, and none of the memos I'veseen comply with a literal reading of the statute. This is an issuewe are working on in the "fix bill" for 2009.

Q. How do you help FAIA members keep up with legislative andregulatory changes?

A. We have a monthly "Agents' Education" bulletin we e-mail toour members that includes regulatory and legislative updates andother industry news.

As soon as HB601 was passed, the calls and e-mails started –often scores per day. We have addressed the condo situation inalmost every newsletter since August. Our Web site has several new(and many updated) articles dealing with the issue. Also, we areoffering a new class titled, "Condominium Update and WindMitigation," around the state in 22 cities from January throughabout April. I've spent four to five months researching andpreparing for that class. We've worked with all the major playersinvolved, including the Department of Financial Services, trying tosort out all the misinformation out there. If our members read ourmaterial and attend our class, they will get the latest (and, Imight add, most correct) information available.