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Committee supports amended substitute to raise condo deductible cap to $25,000, adds owner‑notification requirement
Summary
Lawmakers heard testimony from Community Associations Institute volunteers and amended a condominium bill to replace a $5,000 master‑policy deductible cap with $25,000 and require associations to notify unit owners of material changes; proponents said the change would make master policies affordable and reduce surprise special assessments.
The Senate Insurance and Labor Committee heard Senate Bill 230 (LC550489), a measure to change the statutory cap on condominium master‑policy deductibles. The sponsor said the current $5,000 per‑unit cap, set in 2013, prevents associations from buying full replacement‑cost insurance at reasonable prices.
Julie Howard, an attorney who volunteered on behalf of the Community Associations Institute, told the committee that the bill’s purpose is ‘‘to help associations find affordable insurance, which benefits every owner in the condominium’’ and argued that raising or removing the $5,000 cap would prevent surprise special assessments when deductibles exceed the statutory cap.
Howard and an association representative explained that many associations now face master‑policy deductibles commonly in the range of $10,000–$25,000; under current law an association that has a large deductible gap may be forced to draw on reserves or levy special assessments. Proponents said most unit owners already carry HO‑6 (unit owner) coverage that can be used to cover an association deductible and that widening the deductible cap would allow owners and insurers to structure coverage more affordably.
Committee members asked whether raising the cap would place undue burdens on homeowners. Proponents responded that association boards are owners themselves and generally avoid setting deductibles beyond what unit owners can insure, and that the amended language would also require associations to notify all unit owners in writing of any material change in the master‑policy deductible.
A senator described the committee substitute that had been approved previously by committee subcommittee: replace ‘‘$5,000’’ with ‘‘$25,000’’ and add a notice requirement specifying timely written notification by first‑class mail (or delivered electronically with owner consent). Members said that language addressed many of their concerns.
The committee did not take a final vote; the chair said staff would return the corrected committee substitute at a later meeting. Proponents said the change is intended to make it feasible for associations to obtain required master‑policy replacement‑cost coverage without producing surprise special assessments for unit owners.
The committee closed the item for today and planned to pick up the amended substitute at the next meeting.
