This year's hurricane season, which forecasters say is very likely to be above average, could exacerbate the fragility laid bare in the Florida condo market by the turmoil that followed the implementation of the new building safety legislation.

"A severe hurricane season could push vulnerable condos—particularly older high-rises in coastal counties—closer to functional and financial obsolescence," Alessandra Stivelman, partner at Eisinger Law, told Newsweek.

 

Bracing for an Above-Average Hurricane Season

The National Oceanic and Atmospheric Administration (NOAA) said that this year's hurricane season, which will run until November 30, has a 60 percent chance of being above normal, with 13-19 projected storms, six to 10 hurricanes and three to five major hurricanes.

For its position on the coast, Florida is particularly vulnerable to hurricanes and likely to be hit by several of these projected storms. Homeowners in the state are already paying some of the most expensive home insurance premiums in the nation, in part because of the rising catastrophe exposure for carriers in the state.

Over the past five years, several major insurers have cut coverage in the most vulnerable parts of Florida or withdrawn from the state entirely, often citing growing costs as the main reason behind their decision.

Home insurance premiums, in the same amount of time, have shot up threefold. At the moment, the average cost of home insurance in the Sunshine State is $2,625 per year—24 percent more than the national average of $2,100, according to NerdWallet.

On top of rising home insurance premiums, condo owners in Florida are also now facing higher homeowner association (HOA) fees as a result of inspections mandated under a new building safety law. This law, which was passed after the collapse of a 12-story beachfront condo in Surfside in 2021 but had a first crucial deadline on December 31, 2024, also requires condo associations to keep enough funds to pay for necessary repairs and maintenance work.

To avoid rising costs, many condo owners have been trying to sell their units—but the market is now saturated with listings that are finding very few interested buyers.

"Inspections mandated under new condo safety laws have uncovered costly structural deficiencies. If a major hurricane exposes or worsens these conditions, buyers will become even more hesitant," Stivelman said.

Condo owners might end up being stuck with damaged properties that would have very little leverage on the market and would end up costing them even more. Should a hurricane strike, "the association may be forced to allocate substantial resources toward repairs and insurance deductibles at the same time it is required to fund reserves that can no longer be waived," Stivelman said.

Additionally, a particularly damaging storm could render many properties ineligible for conventional financing, adding more Florida condos to the list of properties "black-listed" by Fannie Mae and Freddie Mac.

What Risks Are Condos Facing?

According to Stivelman, "condominiums, especially those located in coastal and flood-prone regions like Florida, are inherently vulnerable to hurricanes due to their high-density, multi-story construction and shared infrastructure."

Older condos built before the implementation of Florida's updated building code may lack adequate wind-load resistance, roof anchoring systems and impact-rated windows, she said.

"Even the more recently constructed buildings may not be sufficiently maintained and or constructed to withstand a hurricane," she added.

Condo buildings may also lack the necessary waterproofing and drainage systems to withstand ??the torrential rain and storm surge that often come with a hurricane. Those in Federal Emergency Management Agency (FEMA) flood zones, additionally, are particularly at risk for flooding, mold and long-term damage to foundations and electrical systems, Stivelman said.

"Living in Florida, water intrusion is a persistent and growing concern even outside of hurricane season. The state's subtropical climate brings frequent, heavy rainfall, often in short, intense bursts that can overwhelm building systems," she said.

"Moreover, rapid urban development and increased construction density have placed significant strain on local infrastructure," Stivelman added.

"In many areas, stormwater drainage systems and utilities have not been sufficiently upgraded to handle the increased runoff volume. As a result, water tends to accumulate quickly around building foundations, parking structures, and lower-level units, increasing the likelihood of seepage, flooding, and long-term moisture damage."

Damages to crucial parts of a condo building—including elevators, mechanical systems, roofs, and building exteriors, which are often the condo association's responsibility—also creates "financial strain for associations and residents alike," Stivelman said.
 

In a Tight Spot

The home insurance crisis that unfolded in Florida over the past few years has left many homeowners struggling to find coverage, whether because the policies on the market are unaffordable or because there are no options available at all.

"Many condo associations struggle with underinsured property, rising premiums and restrictive coverage terms, all of which can leave a condominium building exposed to significant uncovered losses when hurricanes strike," Stivelman said.

Due to skyrocketing property values and reconstruction costs, many associations find that their current property policies do not reflect actual replacement costs. Some buildings carry policies based on outdated valuations, which can result in partial or inadequate payouts after a loss.

Because of the difficulties in finding affordable insurance in the state, "associations often have no choice but to accept higher deductibles and reduced coverage limits, or to turn to excess and surplus lines carriers, which are less regulated and may offer narrower coverage," Stivelman said.

"In addition, hurricane deductibles in Florida are typically percentage-based, and could mean a significant out of pocket cost before coverage begins," she added.

"Many associations do not have the reserve funds to meet these deductibles, delaying critical repairs and restoration," she said. "Even when coverage exists, claim payments are rarely immediate."

Insurers require extensive documentation, engineering reports, and sometimes forensic accounting to process claims. "The timeline from loss to reimbursement can take months or even years, depending on claim complexity and insurer response," Stivelman said.

A recent study by Cotality found that over 8 million homes in Florida are at risk of suffering moderate or greater risk of hurricane wind damage this year, while over 2 million are at risk of significant storm damage.