Condominium Association Must Repair Air Conditioning Lightning Damage

Jan 24, 2017 | Associations, Board of Directors, Budget, Communication, Community, Community Manager, Property Managers, Q&A, Residents

Question: Recently, the outdoor air conditioning unit servicing my condominium unit was struck by lightning. I turned the claim into my insurance policy. My insurance carrier denied the claim stating that it does not insure the air conditioning unit, and that the air conditioning unit is supposed to be insured by the condominium association under Florida law. Is this correct? (R.L. by e-mail)
Answer: Yes. The obligations to insure the condominium property, and to repair the condominium property following damage caused by an insurable event, is one of the areas that causes the most confusion for condominium associations, association managers, and unit owners. The reason for this confusion is mainly due to the fact that in 2008 the Florida Legislature significantly rewrote the insurance requirements for condominium associations in the Florida Condominium Act, Chapter 718 of the Florida Statutes. The 2008 amendments to the Condominium Act have been previously discussed on this blog.Since 2008, the statute has provided that the association’s property insurance policy must provide coverage for all portions of the condominium property as originally installed or replacements of like kind and quality, in accordance with the original plans and specifications. The statute then goes on to carve out certain exceptions and require these items to be insured by the unit owner. The items excluded by statute from the association’s insurance responsibilities include all personal property within the unit or limited common elements; floor, wall, and ceiling covering; electrical fixtures; appliances; water heaters; water filters; built-in cabinets and countertops; window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components; and replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit.

The outdoor air conditioning unit is part of the “condominium property as originally installed” and is not on the list of “excluded items” and is therefore the insurance responsibility of the association. This is so even though many declarations define air conditioning equipment as “limited common elements” and require the owner to maintain, repair, and replace these items. That is one of the main sources of confusion. The duty to maintain, repair, or replace is set by the declaration of condominium, while the duty to insure and repair after an “insurable event,” or “casualty” is set by statute.

Because the air conditioning unit was damaged by an insurable event, the association should submit a claim to its insurance carrier. Chances are, the replacement cost may be below the deductible, which leads to the next issue, who pays.

The statute also discusses the responsibility to pay for repairs caused by an insurable loss when there is insufficient insurance coverage, including due to the insurance deductible. The law provides that any portion of the condominium property which must be insured by the association against property loss which is damaged by an insurable event shall be reconstructed, repaired, or replaced as necessary by the association as a common expense. Another complicating factor in this part of the law is that it conflicts with the provisions of many declarations as written when the law was created, opening up a whole realm of constitutional legal issues.

However, taking the current law at face value, and assuming your association has not taken the procedures in the statute to “opt out,” the association insures the air conditioner and must pay to have it replaced after an insurable event such as a lightning strike, and must absorb any deductible as a common expense shared by all unit owners.