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Originally Posted by jyl
Some good insurance experience here, so let me throw out this question: will we see a wave of insurers cancelling policies on older Florida condos now, or as the suddenly urgent and stringent 40 year inspections happen? If you’re an insurer, aren’t you going to obtain and examine every such inspection report and yank coverage if anything at all looks even a little amiss? There’s plenty of buildings to insure, why mess with 40+ year old condos?
And some good engineering experience, so another question: will there be enough engineering firms willing to do the 40 year inspections? If you’re a peer of Frank Moriboto (sp), and see him sucked into a massive hell of lawsuits for his thorough 2018 report, do you want to take that risk yourself? Indemnification or waiver of claims by the condo association won’t protect you, almost nothing you can say in your report will prevent your being sued, and the fee for inspections surely isn’t enough to be worth jeopardizing your future?
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For sure there will be a wave of cancellations and new underwriting guidelines as a result of this event. The cancellations will not just occur in Florida it will have a ripple effect everywhere and in all buildings with similar construction. Remember a condominium is not a type of building but a form of ownership. How many parking garages, hotels, office buildings around the country have similar construction as this building? Every casino in Atlantic City, NJ is as old as this building except one. In addition to the salty ocean air and sun as this building they deal with the harsh environment of winter with freezing and thawing, ice buildup and tons of corrosive salt being dumped on horizontal surfaces every year.
I am sure moving forward every renewal will come with a requirement of an engineers report before coverage will be offered and some renewal proposals have already been rescinded pending a satisfactory engineers report. Some companies may still offer a renewal but will specifically exclude losses related to this type of event.
As an example after 9/11 all insurers (that I am aware of) excluded terrorism. Any event labeled by the Government as "terrorism" was excluded. But, you could buy terrorism coverage for an additional premium. So the Boston Marathon bombing, the damaged buildings if they did not purchase terrorism coverage did not have coverage.
We have buildings we insure with older roofs (20 years) or roofs that are damaged. The insurer will issue a policy but excludes the roof and damage to the property as a result of the roof. Some carriers will offer coverage if the roof is inspected by a licensed roofer and provides a report the roof is in sound condition.
We have some carriers with tiered deductibles or exclusions based on events. Wind is an example. If the storm is an every day thunder storm there is one deductible if your property is damaged by wind. If the storm gets assigned a name that triggers the endorsement and the deductible changes or in some cases cancels wind coverage for that event.
It is even possible moving forward losses like this may be uninsurable in the open market and the Government will need to step in as is the case (until recently) with flood insurance.