Surfside, Florida Collapse Victims Face Insurance Subrogation and Mortgage Complications

When Champlain Towers South in Surfside, Florida collapsed, survivors were left wondering what happened and how to move forward. Investigations are still ongoing as to what caused the collapse, but experts and engineers suspect delayed repairs, prolonged structural damage and environmental factors were at least partly to blame.

Several lawsuits have already been filed against the Champlain Towers South Condominium Association, and questions still remain about homeowners insurance claims filed by condo owners.

One of the biggest concerns is subrogation. Complications with mortgage companies are also causing headaches for some condo owners.

Subrogation and How it May Affect Future Payments

Many survivors who filed condo insurance claims have already received checks from their insurers. However, a legal process called subrogation has made many unit owners hesitant to cash their checks.

Subrogation is the process in which insurance companies seize any future payments to policyholders to recover paid claims.

What subrogation means for condo owners is that any money they may receive through lawsuits or other processes can be seized by the insurance company to reimburse themselves for the claim amount.

If a homeowner receives a check for $100,000 from the insurance company and they are awarded an additional $100,000 in a lawsuit, those funds would be diverted to the insurer.

Typically, insurance companies only seize the amount they paid out for a claim.

Condo owners at Champlain Towers South are concerned that if they accept the money from their insurance companies, they may be losing their rights to collect through lawsuits.

Complications with Mortgage Companies

For some condo owners, subrogation isn’t the only concern. In cases where there are mortgages on units, insurance companies are making checks payable to both the mortgage company and the condo owner.

Because the unit no longer exists and there’s still a balance on the unit, the mortgage company may try to use the majority of the proceeds to pay off the remainder of the loan. In this case, condo owners may be left without the funds they need to find new housing and rebuild their lives.

Some condo owners have been fighting with mortgage companies to sign over the checks they received. Unfortunately, these complications are just one more hurdle condo owners must face in moving forward with their lives.

$49 Million or More to be Split Among Victims of the Collapse

In early September, reports indicated that victims of the collapse would split at least $49 million.

In July, five lawsuits had already been filed against the Champlain Towers South Condominium Association, including:

• A premises liability lawsuit
• Three construction defects lawsuits
• A contract and indebtedness lawsuit

That same month, Florida’s insurance regulator had requested all insurers provide information about policies associated with the collapsed building.

It remains to be seen whether subrogation will ultimately stand in the way of condo owners receiving future payments through lawsuits and other means. Experts have stated that insurance companies are paying claims in good faith and there should be no concern about cashing checks. However, policies have differing terms, and each individual situation should be carefully reviewed before making a decision.

Prevalence of Tropical Storms and Hurricanes in Florida

Tropical storms have sustained winds of between 39 and 73 mph. Hurricanes have sustained surface wind of 74 mph or greater. Major hurricanes can have winds that reach 110 mph (Category 3) or higher.

Throughout hurricane season, Florida averages the following:

• 6 hurricanes
• 3 major hurricanes (category 3 or higher)
• 12 named storms

Northwest Florida experiences the most hurricane damage, followed by the Southeast and Southwest.

In 2021 already (late September), there have been four major hurricanes across the country, with over $55 billion damages. Homeowners insurance covers many of these properties, but there may be steps you’re not taking that will reduce your chances of having your own damages covered.

What to Look for in Homeowners Insurance Policy to Determine Coverage

You may have hurricane damage coverage on your homeowner’s insurance policy, but that doesn’t mean that all damage is covered. You’ll want to look through your policy to see the following:

• Wind damage. Check to see if your policy covers wind damage. Some policies only cover partial wind damage, while others will exclude wind damage completely. Due to the strong winds of a hurricane, you need to ensure that you have full wind coverage. Additionally, is hurricane damage covered under your standard deductible, or is there a separate deductible for hurricane damage?
• Flood damage. Hurricane season brings massive amounts of water to Florida. Does your policy cover flood damage from a hurricane, or do you need to have a separate flood insurance policy?

Insurance is complicated, and assuming that your hurricane coverage is enough is a common mistake. There are complex clauses that may cover you if wind damages your roof and the storm pours water through the hole in the roof. However, if you didn’t take the proper steps to protect your home, you’re still going to have to pay a deductible and deal with insurers.

It’s best to avoid hurricane damage by taking precautions prior to any damage, such as: