How Does the Ordinance Section of My Insurance Policy Affect the Florida “25% Rule”?

Section 708.1.1 of the Florida Building Code, often referred to as the “25% Rule,” implements guidelines for roof replacement requirements. The section states,

Not more than 25 percent of the total roof area or roof section of any existing building or structure shall be repaired, replaced or recovered in any 12-month period unless the entire roofing system or roof section conforms to requirements of this code.

This appears to be a bright-line rule that essentially means that if more than 25% of the roof or roof section is damaged during a one-year period, it must be replaced. However, if the damage totals less than 25% of the roof or section, then the roof can simply be patched.

What happens if the property insurance policy specifically excludes causes of loss based upon the enforcement of ordinance or law? Is the insurance company still required to pay for a roof replacement based on Florida law? The case, Royale Green Condominium Ass’n, Inc. v. Aspen Specialty Insurance Company,¹ explores this problem. In Royale Green, the defendant insurance company, Aspen, argued that it was not required to pay for a full roof replacement despite the “25% Rule,” because the policy did not, “provide coverage for full roof replacement when said replacement is due solely to the enforcement of ‘ordinance or law’ requirements.”²

The policy in Royale Green explicitly stated:

1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

a. Ordinance Or Law

The enforcement of any ordinance or law:

(1)Regulating the construction, use or repair of any property; or

(2)Requiring the [t]earing down of any property, including the cost of removing its debris.

While it may seem as though Florida law should prevail over an insurance policy provision, Florida courts have held that the opposite is true. In fact, “[i]t is well settled that, as a general rule, parties are free to contract-out or contract around state or federal law with regard to an insurance contract, so long as there is nothing void as to public policy or statutory law about such contract.”³

Property owners should carefully read their insurance policies to determine whether certain Florida requirements, such as the “25% Rule,” are covered under their policy. Such an exclusion can lead to increased financial burden for a property owner when trying to comply with an ordinance or statute.
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¹ Royale Green Condominium Ass’n, Inc. v. Aspen Specialty Ins. Co., No. 1:07-cv-21404, 2009 WL 799429 (S.D. Fla. Mar. 24, 2009).
² Royal Green, at *4.
³ King v. Allstate Ins. Co., 906 F.2d 1537, 1540 (11th Cir.1990).