The Homeowner's Bill of Rights has been approved in the legislative session 2008! It is an insurance reform that will dramatically expand consumer protection for all Floridians from abuses by big insurance companies, just signed by Governor Crist into law.

This bill has been proposed seeking strong new consumer protections, accountability, fairer practices and respect for Florida consumers, from insurance companies.

The Homeowners' Bill of Rights takes the following actions:

• freezes rate hikes by Citizens for one year
• ends the insurance companies' ability to use arbitration panels to raise rates over the objections of regulators
• stops the practice of arbitrary cancellations
• mandates companies to pay claims in a fair and timely manner
• increases civil penalties for insurance companies who evade the law or abuse consumers
• improves the market for new, innovative insurers to cover more Floridians at lower rates

This limits and gives relief to Florida citizens from unfair and unacceptable insurance practices.

Visit http://www.flsenate.gov/data/session/2008/

Senate/bills/billtext/pdf/s2860er.pdf to view the bill in its entirety.

Q.-What kind of insurance is needed to be maintained by the Condominium Association?

A.- INSURANCE Florida Statute Section 718.111(11)

The association must maintain adequate insurance to protect the property. It shall cover

1.  All portions of the condominium property located outside the units;

2.  The condominium property located inside the units as such property was initially installed, or replacements thereof of like kind and quality and in accordance with the original plans and specifications or, if the original plans and specifications are not available, as they existed at the time the unit was initially conveyed; and

3.  All portions of the condominium property for which the declaration of condominium requires coverage by the association.

The individual unit owner shall insure all real or personal property located within the boundaries of the unit owner's unit, which is excluded from the coverage to be provided by the association as set forth above.

Casualty Coverage

The association must have a master insurance policy for adequate insurance to cover serious damage to the common elements. It is the board of director's decision to determine how much deductible they wish to have under the master policy. If the policy's limits do not cover the total amount of the damages the association is then obligated to specially assess the unit owners to cover the damages that are not covered by the master policy.

The individual owners are ultimately responsible for the deficit and assessment that is not covered by the association's policy for the common elements. Bear in mind that the obligations of the association are funded by the individual unit owners' maintenance payments.

The Master Insurance policy (hazard insurance) is to cover, up to its limits and less the deductible, all damage to the common elements and possibly each apartment due to the casualty. (Each Declaration of Condominium and each insurance Policy must be reviewed). Florida Statute Section 718.111(11) only governs your current insurance obligations.

Usually the Declaration states that the premises shall be repaired or reconstructed to substantially the same condition as originally built or existing immediately prior to the casualty and substantially in accordance with the original plans and specifications of the condominium and any subsequent modifications thereto. The extent of this damage must usually be determined within 60 days.

If the cost of damages to the common elements and apartments exceed the policy limits of the Master Policy as stated therein, the association must obtain the balance by an assessment. The Declaration of Condominium sets out the extent each owner must contribute to the assessment. Usually all unit owners must pay the assessment to rebuild the common elements. The extent that the unit owners must contribute to the rebuilding of the individual damaged units is also set out in the declaration of condominium.

If the Board refuses to pursue its claim against the master policy insurer, you must send a certified letter to them with an “inquiry” (demand) pursuant to Section 718.112(2)(a)2 Florida Statutes. If they refuse to answer within 30 days you may seek legal action against the Association and Board of directors pursuant to Chapters 617 and 718 Florida Statutes.

If the master policy insurer refuses to comply with its contract with the association you should contact the Florida Department of Financial Services at (800) 342-2762  or at www.fldfs.com. You may also qualify for assistance from FEMA and the IRS (800) 829-3676.

Q. WHAT IS AN AUDIT?

A.- An audit provides the highest level of assurance that an association's financial statement complies with the generally accepted accounting principles (GAAP). An unqualified audit opinion (one without caveats), expresses reasonable assurance that the financial statements contain no material misstatements. To reach this opinion, the CPA must examine the association's statements and documents supporting the amounts and disclosures. The accountant must also access the associations accounting systems and the internal controls it uses to report transactions. To issue an audit report, he or she is usually required to be independent of the association.

A review is less extensive than an audit, but more involved than a compilation (the third choice). A review doesn't require the accountant to study and evaluate internal controls, verify data with third parties, or physically inspect assets. Rather a review report expresses limited assurance in the form of a statement. To perform a review, a CPA needs to possess a general knowledge of the accounting principals and practices of the associations industry, as well as an understanding of its business. If the financial statements appear inconsistent or questionable, the accountant may perform additional procedures.

Q.- Who supervises financial reporting?

A.- FINANCIAL REPORTING

Florida Statute Section 718.111(13) and Section 61B-22.006 of the Florida Administrative Code govern financial reporting requirements.

Q. Can the Board mortgage common elements at its will?

A.- MORTGAGE OF COMMON ELEMENTS

The association may mortgage association property in the manner provided in the declaration or upon the approval of 75% of the total voting interests. Section 718.111(7) Florida Statutes.