Professional Insurance Agents of Florida instructor Ron Silverman answered 40 essential questions about catastrophe planning for hurricanes during educational sessions titled “Lessons Learned from Charley, Frances, Jeanne and Ivan,” Sept. 19 in St. Petersburg, Fla.
Silverman, a long-time PIA of Florida instructor and owner of the Silverman Insurance Agency in Deltona, Fla., presented his class as Hurricane Rita was approaching the Florida Keys. Many course participants explained they were only able to attend the course because a hurricane watch had been declared in the Keys, putting a freeze on homeowner’s policy sales, so they had time to attend.
Silverman’s goal was to cover 40 questions, including everything from, When is a hurricane considered a hurricane for your client under Florida statutes? What is wind-driven rain? and What are the ramifications of the Mierzwa decision?
“If a hurricane watch is announced for any part of Florida, the entire state goes under hurricane deductibles and that condition stays in effect until 72 hours after the hurricane watch stops,” Silverman explained to answer the first question.
Silverman described the Mierzwa decision as a straightforward case with complex legal issues. He said basically the case hinges around whether or not a total loss is caused by flooding or hurricane and if so, how much each policy should pay.
He said the plot thickens when local ordinances become involved requiring a building, if more than 50 percent damaged, to be condemned and brought up to standards. Silverman explained that in such cases the building often has to be totally demolished and the property landscaped to meet building code requirements. A new law mandates the offering of 50 percent law and ordinance coverages as of Oct. 1.
Silverman described the loopholes in condominium policies. He outlined when association policies would cover a condominium, and wouldn’t. He said that the contents of condos are never covered by the association policies, and that owners are often underinsured. He cited luxurious condos in which the owner had put in special counter tops, cabinets and bathroom appliances.
“A majority of the condominium lawsuits you see are about lack of coverage,” Silverman explained. “Owners often sue the condominium board for misconstrued breach of duty.”
He explained problems are often encountered by condo owners because they don’t realize what is covered.
Another common problem outlined by Silverman, occurs when the condo owner wants to obtain a mortgage.
“Condominium owners have a divisible interest in their building, covered under the master contract on that basis,” Silverman said. “But, they have no right to encumber that property in the master policy to their private unit.”
Silverman said that asking for a mortgage clause in a policy is a major error, hidden in the fact that all condo owners in fact belong to an association. He said that if a condominium building is blown by a hurricane and not rebuilt, then when the condo association receives payment from the insurance company, an apartment owner in a 100 unit condominium would receive one-one-hundredth of the amount, therefore coverage can not be granted as a mortgage clause.”
Silverman pointed out that one of the most common types of condominium claims occurs when a pipe breaks. He said the three most common types of claims, in order of occurrence are pipe leaks, sinkholes and hurricanes.
For condominium owners who want to be covered from bursting pipes Silverman recommended a wrap policy which makes the standard DP1 policy into a DP3.
“When selling homeowners policies be careful to indicate what is and isn’t covered,” Silverman concluded. “Flood coverage does not cover anything like fences, retaining walls or docks.”
PIA of Florida held eight courses across the Sunshine State, the final two courses are being held Sept. 27 in Pensacola. Morning and afternoon sessions include the hurricane catastrophe course and an update on Florida’s 2005 legislation.
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