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Senate committee pauses bill to remove $5,000 condo deductible cap; members signal $25,000 limit and owner notice
Summary
Lawmakers debated SB230, which would eliminate a $5,000 cap on assessable condo deductibles. After extended testimony from condo attorneys and insurers, the sponsor withdrew a do-pass motion and agreed to pursue a committee substitute that would raise the cap to $25,000 and add an owner-notice requirement.
The Georgia Senate Insurance and Labor Committee on Feb. 25 held extended debate on Senate Bill 230, which would remove a statutory $5,000 cap on the deductible an association may assess back to an individual condominium owner after an insurable loss.
Supporters, including condominium attorneys and insurance agents, told the committee the $5,000 cap forces condominium associations to self-insure because commercial carriers now commonly offer master-policy deductibles of $20,000 to $25,000 or higher. Those higher deductibles, witnesses said, have prompted assessments or larger reserve requirements that spread costs across all owners, even those not involved in the loss.
Senator Sean Steele, sponsor of SB230, said the bill would "eliminate the amount of deductible for any 1 unit owner not to exceed $5,000," allowing associations and their insurers to negotiate reasonable deductibles. Sean Rucker, an insurance agent with Community Management Associates, told the committee that because carriers now offer much larger deductibles, “the other homeowners in the community that are not involved in the loss are having to pay the deductible through a special assessment or through reserve funds.”
Julie Howard, an attorney who represents homeowner and condominium associations and a former president of the National and Georgia chapters of the Community Associations Institute, said association premiums have risen 300% to 400% in some communities and that the $5,000 cap leaves a ‘‘doughnut hole’’ of uncovered costs between the association policy deductible and what unit owners’ HO-6 policies cover. "There are only 2 other states in the country, Maryland and Oregon, that have similar language," Howard said, arguing Georgia should align with most states by removing the fixed cap.
Committee members questioned potential consequences for individual owners, noting that HO-6 policies vary and many owners currently carry only the $5,000 loss-assessment coverage the statute assumes. Senator Harbin, an insurance professional, recommended adding a statutory notice requirement so owners know they must raise their HO-6 loss-assessment limit if the cap is changed. Several senators favored a fixed higher cap rather than an unlimited removal; Senator Steele agreed to pursue $25,000 as a likely compromise and to add notice language.
On the motion to pass, Senator Steele moved to advance the bill, but later withdrew the motion to allow staff time to draft a committee substitute reflecting a $25,000 cap and an owner-notification provision. The chairman said the committee will reconvene and consider the revised language at a later meeting.
If adopted with a $25,000 cap, supporters said, the change would allow an individual owner’s HO-6 policy to cover the association policy deductible—reducing out-of-pocket assessments to the broader membership—though committee members emphasized the need for clear notice to unit owners and a transition period so owners can increase HO-6 coverage where necessary.
