Insurance Allocation Between Association and Unit Owner (FL vs. AL)

Informational only. Not legal advice. No attorney-client relationship is created by reading this post. Consult a licensed attorney in your jurisdiction.

When a condominium suffers a casualty — whether hurricane, fire, water intrusion, or structural failure — the question of who pays for what is rarely obvious. The master policy carried by the association does not cover everything. The unit owner's HO-6 or individual property policy does not replicate what the master policy covers. The gap between them — and the sometimes overlapping coverage — is the source of most post-casualty insurance litigation in community association contexts. Florida and Alabama have answered the allocation question in distinct ways: Florida through detailed statutory language in the Condominium Act, Alabama through the Uniform Condominium Act's insurance provisions. Understanding both frameworks, and their points of divergence, equips practitioners in either state to identify the right policy, the right claim, and the right theory.

The Florida Framework: § 718.111(11)

Statutory Mandate and Policy Standards

Section 718.111(11), Florida Statutes, governs insurance for residential condominiums in Florida. It is stated to apply to every residential condominium regardless of when its declaration was recorded — preempting any contrary declaration language. The association is required to obtain "adequate property insurance" based on the replacement cost of the property, as determined by an independent insurance appraisal updated at least every 36 months.

Section 718.111(11)(d) imposes a best-efforts obligation on unit-owner-controlled associations: the association "shall use its best efforts to obtain and maintain adequate property insurance to protect the association, the association property, the common elements, and the condominium property that must be insured by the association."

What the Master Policy Must Cover

Under § 718.111(11)(f), every property insurance policy issued or renewed on or after January 1, 2009, for the purpose of protecting the condominium must provide primary coverage for:

1. All portions of the condominium property as originally installed or "replacement of like kind and quality, in accordance with the original plans and specifications"; and
2. All alterations or additions made to the condominium property or association property pursuant to Fla. Stat. § 718.113(2).

The practical effect is that the master policy covers the structure as built — walls, floors, ceilings, plumbing and electrical systems, elevators, structural elements. It does not cover owner upgrades: if an owner installed marble countertops over the original laminate, the marble is the owner's problem.

What the Master Policy Expressly Excludes

Section 718.111(11)(f)(3) carves out from mandatory master policy coverage all of the following items within the boundaries of the unit:

• Personal property;
• Floor, wall, and ceiling coverings;
• Electrical fixtures and appliances;
• Water heaters and water filters;
• Built-in cabinets and countertops;
• Window treatments (curtains, drapes, blinds, hardware, and similar components);
• Replacements of any of the foregoing.

These items are the unit owner's responsibility, both for insurance and for reconstruction. In a hurricane or water-damage scenario, this means the association rebuilds the drywall and the structure; the owner replaces the flooring, appliances, and cabinetry.

The Reconstruction Obligation: § 718.111(11)(j)

The reconstruction framework is where the Florida statute becomes particularly consequential. Under § 718.111(11)(j), "any portion of the condominium property that must be insured by the association against the property loss pursuant to paragraph (f) which is damaged by an insurable event shall be reconstructed, repaired, or replaced as necessary by the association as a common expense." This duty applies "even if the association chooses not to file an insurance claim" — meaning the association cannot avoid reconstruction liability by declining to submit a claim (e.g., because the loss is below the deductible).

There are exceptions: if the loss was caused by the intentional conduct, negligence, or failure to comply with the declaration's terms by a unit owner, family member, occupant, tenant, guest, or invitee, that owner bears the cost of reconstruction of the affected portions without compromise of the insurer's subrogation rights.

This exception is frequently litigated. An association that attributes a water-loss event to a unit owner's failure to maintain plumbing — and then seeks to recover the cost of reconstruction from that owner — must establish causation between the owner's conduct and the specific damage to the association-insured portions.

Deductibles as Common Expenses

Under § 718.111(11)(j), all property insurance deductibles and other damages in excess of insurance coverage are common expenses of the condominium — allocated among all unit owners as common expenses — except where the damage was caused by the negligence or rule violation of a specific unit owner. In that case, the deductible attributable to the damage caused by that owner is assessed to that owner individually.

In practice, this creates a recurring dispute: when a hurricane causes widespread damage across the community, the association's $500,000 deductible is a common expense. When a single unit owner's dishwasher failure floods five units below it, the attributable portion of the deductible — and possibly the cost of reconstruction of the flooded units — falls on that owner.

HO-6 Policies: The Unit Owner's Coverage

The statutory exclusions in § 718.111(11)(f)(3) define the gap that an HO-6 (unit-owner's) policy must fill. A properly structured HO-6 policy covers:

• Interior finishes and improvements within the unit (floors, cabinets, countertops, wall coverings, fixtures, appliances);
• Personal property;
• Liability for bodily injury or property damage occurring within the unit;
• Loss of use/additional living expenses if the unit becomes uninhabitable;
• Loss assessment coverage — the owner's share of a special assessment levied by the association because a covered casualty exceeded the master policy's limits.

Florida Statute § 627.714(1) requires that every unit-owner residential property policy include at least $2,000 in property loss assessment coverage, with a deductible of no more than $250 per direct property loss. This statutory floor is often inadequate for real hurricane scenarios; practitioners should advise owners to carry loss assessment coverage commensurate with the association's deductible allocation methodology.

Subrogation Framework in Florida

The master policy's subrogation rights — the insurer's ability to step into the association's shoes and sue the unit owner who caused the damage — are governed by both the policy and Fla. Stat. § 627.714(4). That provision states that if the association's insurance policy does not provide rights for subrogation against unit owners, the unit owner's individual policy "may not provide rights of subrogation against the condominium association." The converse is that where the master policy does include subrogation rights against unit owners (as many do), a unit owner's negligent act can result in the master insurer subrogating against that owner — and the owner's HO-6 liability coverage is the only protection.

The Alabama Framework: § 35-8A-313

Parallel Structure, Different Detail

Section 35-8A-313 of the Alabama Uniform Condominium Act (Acts 1990, No. 90-551; Act 2018-403) creates a property insurance obligation for Alabama condominium associations that parallels Florida's requirement but with notable differences in scope and specificity.

Under § 35-8A-313(a), commencing at the time of first conveyance of a unit to a non-declarant, the association must maintain "to the extent reasonably available":

1. Property insurance on the common elements insuring "against all risks of direct physical loss commonly insured against" (or, for conversion buildings, fire and extended coverage). The minimum coverage amount is the greater of 80 percent of actual cash value of the insured property at the time of purchase or such greater percentage as necessary to avoid co-insurance penalties, exclusive of land, excavations, foundations, and normally excluded items; and

1. Liability insurance "in an amount determined by the board but not less than any amount specified in the declaration" covering death, bodily injury, and property damage arising from use, ownership, or maintenance of the common elements.

Horizontal-Boundary Buildings: Units Included

Under § 35-8A-313(b), in buildings "containing units having horizontal boundaries described in the declaration" — the high-rise, stacked-unit configuration — the property insurance maintained by the association "must include the units, but need not include improvements and betterments installed by unit owners." This provision creates a "bare walls-in" structure: the association insures the units as originally built, but owner improvements are excluded. The effect closely mirrors Florida's § 718.111(11)(f) framework.

Non-Availability Notice Obligation

Unlike Florida, Alabama § 35-8A-313(c) imposes an explicit notice obligation when the required insurance is not "reasonably available": the association must "promptly cause notice of that fact to be hand-delivered or sent prepaid by United States mail to all unit owners." This notice obligation is meaningful in the post-hurricane insurance market, where admitted carriers have withdrawn from coastal markets and associations may be forced into surplus-lines coverage or Citizens Property Insurance analogues.

Mandatory Policy Provisions: § 35-8A-313(d)

Alabama § 35-8A-313(d) requires that all association-carried property insurance policies provide:

1. Each unit owner is an insured person under the policy with respect to liability arising from interest in common elements or membership in the association;
2. The insurer waives subrogation rights against any unit owner or member of their household;
3. No act or omission of any unit owner (unless acting within the scope of authority on behalf of the association) will void the policy or be a condition to recovery; and
4. The association's policy provides primary insurance in any loss where there is other insurance in the name of a unit owner covering the same risk.

The mandatory subrogation waiver in § 35-8A-313(d)(2) is the most significant divergence from Florida's approach. In Alabama, the association's insurer cannot subrogate against a unit owner whose negligence caused the loss. This eliminates the most common scenario in Florida where a unit owner faces personal liability for a water-damage event that triggers the master policy. Alabama unit owners are thus substantially better protected from subrogation claims — at the cost of higher common-expense assessments for the association's increased insurance outlay.

The primary-policy provision in § 35-8A-313(d)(4) also has practical significance: where a unit owner has her own HO-6 policy covering the same loss, the association's policy responds first. The unit owner's policy is excess only. This prevents the insurer from arguing that the owner should have made a claim on her own policy first.

Insurance Proceeds and Reconstruction: § 35-8A-313(e) and (h)

Under § 35-8A-313(e), property insurance proceeds are payable to any insurance trustee designated in the policy, or otherwise to the association — never directly to individual unit owners or lienholders. The trustee or association holds the proceeds in trust for all unit owners and lienholders as their interests appear. Proceeds must be disbursed first for repair and restoration; only surplus proceeds (after complete repair) may be distributed to owners and lienholders.

Section 35-8A-313(h) addresses the decision not to rebuild. Any damaged condominium property must be repaired "unless": (1) the condominium is terminated (in which case § 35-8A-218 applies); (2) repair would be illegal under health or safety laws; or (3) 80 percent of unit owners, including every owner of a unit or limited common element that will not be rebuilt, vote not to rebuild. If a vote not to rebuild passes, the insurance proceeds attributable to non-rebuilt units are distributed to those unit owners and their lienholders; remaining proceeds are distributed to all unit owners in proportion to common-element interests.

Comparing Florida and Alabama

Practice Notes

For Florida unit owners facing subrogation: Review the master policy carefully. If the policy does not contain a subrogation waiver against unit owners, and the loss was caused by the owner's negligence, the master insurer has a subrogation right. Ensure the HO-6 policy has adequate liability limits — $100,000 is likely insufficient for a multi-unit water loss in a high-rise.

For Alabama unit owners: The statutory subrogation waiver in § 35-8A-313(d)(2) is a powerful protection. An insurer that attempts to subrogate against a unit owner in Alabama is violating the mandatory policy provision the statute imposes. Raise this defense immediately.

For associations in both states: The association's reconstruction obligation after a casualty is non-delegable and not conditioned on insurance proceeds. Boards that delay reconstruction because the insurer is disputing coverage expose the association to separate breach-of-statutory-duty claims from unit owners who need their units repaired.

Loss assessment coverage: Advise unit owners in both states to carry meaningful loss assessment coverage. In Florida, the $2,000 statutory minimum under § 627.714(1) is inadequate for any significant hurricane deductible allocation. In Alabama, where no statutory minimum is codified, the governing documents and common expense allocation methodology should drive the coverage decision.

Open Questions

The expansion of Florida's "all-risk" property insurance market instability since 2022 raises serious questions about whether associations can meet the § 718.111(11) replacement-cost standard when admitted carriers refuse coverage and surplus-lines policies typically exclude wind or impose sky-high deductibles. Whether a board satisfies the "best efforts" obligation by procuring a Citizens policy with a large deductible — thus shifting significant reconstruction cost to individual owners — is not authoritatively resolved.

In Alabama, the "reasonably available" qualifier in § 35-8A-313(a) is doing significant work in the current market. An association that cannot obtain compliant coverage at any reasonable price must give notice to owners; whether it may then maintain sub-standard coverage without further obligation is an open question.

Closing

Insurance allocation in condominiums requires simultaneous mastery of the master policy language, the applicable statute, and the governing documents. In Florida, the detailed statutory scheme of § 718.111(11) provides considerable clarity — but the reconstruction obligation, deductible allocation, and subrogation framework each have litigation potential in every significant casualty. In Alabama, the mandatory subrogation waiver and primary-policy provision provide stronger unit-owner protection against the single most common insurance dispute, at the cost of a somewhat less detailed overall framework. The practitioner who maps these statutory provisions against the actual policies before a casualty occurs is far better positioned than one who reads them for the first time after the adjuster has arrived.

Talk to Yates Anderson

If you are litigating a matter in this area — or weighing whether to — the working analysis above only goes so far. Request a case evaluation and a Yates Anderson attorney will respond within one business day.

Informational only. Not legal advice. No attorney-client relationship is created by reading this post. Consult a licensed attorney in your jurisdiction.