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Committee advances measure to raise condominium master-policy deductible to $25,000
Summary
A Senate committee voted to advance LC461447S to raise the statutory cap on condominium master-policy deductibles from $5,000 to $25,000, aiming to close a coverage gap that can prompt special assessments for unit owners.
A Senate Insurance and Labor Committee advanced a bill that would raise the statutory limit on condominium master-policy deductibles from $5,000 to $25,000, sponsors and industry witnesses said, to make coverage available in a market that increasingly requires higher deductibles.
The lawmaker presenting LC461447S told the committee the amendment replaces the prior $5,000 cap with a $25,000 cap and adds notification language. "We changed line 29 to to not exceed 5,000, changed that to 25,000," the lawmaker said, describing the change and a new notification provision that committee members had requested.
Why it matters: committee members and insurance professionals described a recurring problem in multiunit properties: master policies are increasingly issued with higher deductibles, and if state law forces a low statutory ceiling, carriers or associations can be unable to secure coverage. That gap can leave associations to assess owners to cover the shortfall. "This is a gap that the HO 6 would pay," the committee's vice chairman and pro tem said in describing how many individual HO-6 (unitowner) policies mirror the master deductible for assessment coverage.
Committee questioning focused on whether individual unit owners would be left responsible for large amounts if the master deductible rises. Insurance agents and a representative for the Community Associations Institute said typical HO-6 assessment coverage is intended to indemnify unit owners so that, in practice, owners are not left to shoulder the whole difference. "The HO 6 insurers ... mirror the deductible of the master HOA policy so that there's not a gap for the individual HO 6 policy holder," one insurance witness said.
Vote and next steps: Vice Chairman and Pro Tem moved that LC461447S do pass and Senator Hodges seconded. The committee took a hand/voice vote; the chair reported one negative and a majority in favor and the bill advanced from the committee. No floor date was set in the hearing record.
What the change would do: the bill would remove the statutory $5,000 ceiling and permit a higher deductible (the submitted amendment uses $25,000). Supporters said this aligns the statute with market realities and reduces the risk that associations must levy special assessments when a claim exceeds a statutory ceiling; opponents and questioners sought clarity on whether HO-6 carriers would reliably provide assessment coverage and whether lenders' requirements would change.
The committee record shows industry witnesses encouraged condo owners to confirm individual policy assessment limits and for associations to negotiate master coverage carefully. The committee took the vote and advanced the measure.
