Duane Michael Wagner Vero Beach The Champlain Towers Under insured

Judge: Demolished Florida Condo’s $48 Million Coverage ‘Inadequate’

• By Timothy Darragh
• July 07, 2021 04:08 PM (EDT)

MIAMI //BestWire// – The demolished condominium towers in Surfside, Florida, that catastrophically collapsed June 24 have property and liability insurance coverage of $48 million, a figure too low to compensate fully the displaced and the families of those who died, a judge said at a recent emergency hearing.

The Champlain Towers South condo association had $30 million in property coverage and $18 million in liability coverage, Miami-Dade Circuit Judge Michael Hanzman was told at the hearing.

“As I suspected and maybe I hope I’m proven wrong… it looks like for the property damage and death coverage there is $48 million, which will obviously be inadequate to compensate everyone fully to the extent that they’re harmed. And that’s unfortunate,” Hanzman said. “We’re dealing with certainly a limited pot as far as insurers go.”

Great American Insurance Co. provided the $30 million property coverage, Hanzman confirmed at the hearing.

A lawyer for one of the building’s liability carriers, James River Insurance, said it is tendering its general commercial liability policy’s full $2 million.

An attempt to obtain comment from Great American Insurance Co. was not immediately successful.

The association was put into receivership following the partial collapse of the building, which as of July 7 resulted in 46 confirmed deaths, with another 94 individuals missing.

Hanzman said he is considering appointing attorneys to represent those who suffered property losses and survivors of those who lost their lives. He also said he would use the $2 million in liability coverage payments to provide need-based advances to relocating families and those who need financial help to pay for funerals.

In addition, Hanzman ordered attorneys to begin preparing to sell the beachfront property by consulting with professionals about its fair market value.

Observers expect the building collapse will drive “industrywide change” for home and condo owners associations, which will scrutinize inspections and transfer some risk to management companies (BestWire, July 6, 2021).

Travis Moore, a lobbyist for the Community Associations Institute, said it’s likely policymakers now will pay more attention to the issues surrounding the maintenance and insurance coverage of condos like Champlain South. He noted only two counties — Miami-Dade and Broward — require condo towers to be re-certified after 40 years and reinspected every 10 years thereafter.

Among other things, Moore said it’s likely insurers will want to know how many residents of a building have insurance, and how much coverage they have.

Additionally, the cost of insurance will continue to rise as the admitted market shrinks to a handful of companies, he said, noting one carrier, American Capital Assurance, went into receivership this spring (BestWire, April 5, 2021).

The institute last year published a report saying associations facing major renovations face challenges similar to the ones reported by the association at Champlain South: questions about the need for repairs, resistance to paying for them and setting adequate reserves before emergencies occur.

It’s important that building codes and construction standards in Florida and elsewhere reflect the latest in modern building science, said the National Association of Mutual Insurance Companies’ Senior Vice President of Government Affairs, Jimi Grande.

“But equally as important as getting strong standards in place is creating targeted resources that communities can use to implement robust enforcement and inspection, as well as improve older structures,” he said. “Given this, we are continuing to press lawmakers to equip communities with the tools needed to undertake critical retrofits and ensure all homes and buildings are built to the safest standards.”

Great American Insurance Co. currently has a Best’s Financial Strength Rating of A+ (Superior). James River Holdings Group Ltd. entities are currently rated A- (Excellent).