Alex Cavenaugh served as his condominium board’s president for twenty years without a single serious complaint. Then a hurricane damaged three of his community’s eight buildings, the insurance check came in $600,000 short, and a homeowner named Marcy Wideman sued the board. This is the story of how one skipped condo insurance appraisal turned a volunteer position into a personal legal problem, and how a few thousand dollars could have prevented all of it.
Alex
Alex Cavenaugh moved into Harbor Pines in 2004. He was in his late thirties then, running a small printing business, and he bought a second-floor unit in Building C because it had a view of the retention pond and the price was right.
Two years later a neighbor talked him into running for the board. He won, and he never really left. By the time he hit his sixties he had been president for twenty years. He was the guy who ran the annual meeting in under an hour. He knew which owners were behind on dues and which ones were just forgetful. He negotiated the landscaping contract down twice. When people at Harbor Pines had a problem, they called Alex, and Alex usually fixed it.
Harbor Pines is a community of eight midrise buildings. Nothing fancy. Well kept, quiet, mostly longtime owners. The kind of place where the board takes pride in keeping the monthly fees reasonable.
That pride is part of this story.
The condo insurance appraisal decision
Three years earlier, the board’s insurance agent had reminded them that Florida law requires condominium associations to determine the full replacement cost of their insured property at least once every three years, using an independent appraisal. The association’s last condo insurance appraisal was already old. The agent recommended a new one.
The quote came in at about $500 per building. Four thousand dollars for the community.
The board looked at the number in a year when the budget was already tight. The buildings had not changed. Construction was construction. Someone said the old values were probably close enough. Alex agreed, and the board tabled it. Nobody thought of it as a risk. It felt like trimming an expense, the same thing they had been praised for doing for two decades.
So the policy renewed each year using the old numbers: $2.6 million per building. The real replacement cost, the number a current appraisal would have shown, was $3.7 million per building.
The storm
The hurricane came through on a Wednesday night in October. Harbor Pines did not flood and nobody was hurt. But the wind peeled back sections of roof on Buildings C, D, and F, and rain did what rain does once a roof is open. Soaked drywall, ruined insulation, damaged units on the top floors, mold remediation.
The total loss across the three buildings: $2.4 million.
Alex had been through claims before. He expected paperwork, an adjuster, some back and forth, and then a check. What he got instead was a phone call from the agent explaining something called coinsurance.
Most association property policies contain a coinsurance clause. It works like this: the insurance company requires you to insure the buildings to a set percentage of their true replacement cost, commonly 90 percent. If you carry less than that, the company does not pay your claim in full. It pays the same fraction of the claim that you paid of the required coverage.
Harbor Pines was required to carry $3.33 million per building. It carried $2.6 million. That is 78 percent of the requirement.
So the carrier paid 78 percent of the $2.4 million loss. Roughly $1.87 million, and the deductible came out of that. The association was short more than $600,000 on a fully covered storm, with damaged buildings that still had to be repaired.
There was only one place for that money to come from: the owners. The board passed a special assessment of just over $3,000 per unit.
Marcy
Marcy Wideman had owned her unit for eleven months. She bought into Building C in part because the fees were low and the community looked well run. Now she had a tarp over her building, a contractor timeline measured in seasons, and a $3,000 bill for a shortfall she had nothing to do with.
She asked questions at the next meeting. Then she requested records. Then she hired a lawyer.
The lawsuit named the association and its directors. It said the board had failed to maintain adequate insurance, had ignored the legal requirement to update the property’s replacement cost, and had knowingly declined the appraisal that would have caught the gap. And because Alex had been president for twenty years and had led the meeting where the appraisal was tabled, his name was the one people repeated.
Alex was served on a Tuesday. He read the complaint twice at his kitchen table, in the unit he had lived in for over twenty years, and the thing he kept coming back to was that he could not remember the vote. It had been that small a decision.
His lawyer laid it out for him. Boards in Florida normally get strong legal protection when they make careful, informed decisions. But that protection depends on actually meeting your legal duties, and the law on updating replacement cost values is not a suggestion. Worst case, his lawyer told him, the association’s coverage for board members fights the claim because the board knew about the requirement and declined it anyway, and Alex funds his own defense, with a judgment on the other side of it.
The case is still open. So is the question Alex asks himself, which is how twenty years of showing up came down to one line item he cut.
What went wrong
- The association’s replacement cost values were years out of date, so the policy limits were built on numbers that no longer reflected reality.
- The board declined the condo insurance appraisal that would have corrected the values, and the reason was cost: $4,000 for eight buildings.
- The coinsurance penalty turned that gap into a reduction on every dollar of loss, not just the top end.
- The shortfall became a special assessment, which turned owners into plaintiffs.
- The board’s decision was documented in its own minutes, which made “we didn’t know” impossible to argue.
What could have happened vs. what happened
What could have happened: the board spends $4,000, the appraisal updates the values, the policy limits rise to match, the premium goes up modestly, and the storm becomes a normal claim. The carrier pays. The owners never hear the word coinsurance. Alex runs the next annual meeting in under an hour.
What happened: the board saved $4,000, lost more than $600,000 in claim payments, assessed every owner over $3,000, and is now paying lawyers. Alex is personally named in a lawsuit that will follow him for years, over a decision that took less than five minutes.
That is the real price comparison. Not $4,000 versus zero. It is $4,000 versus everything that follows a storm when the numbers are wrong.
Every Florida condo board is one line item away from this. The appraisal is the cheapest thing on the agenda and the only one that decides whether a covered loss gets paid in full. If your association’s replacement cost values are more than three years old, that decision is already sitting in front of you, whether or not anyone has put it on the agenda.
Prestar Services specializes in insurance appraisals for condominium associations and homeowners associations, so your board’s values are current, your coverage matches reality, and this story stays someone else’s.
The people and community in this story are an illustration, created for education.
Resources
Want to check the facts behind this story or take a closer look at your own community’s coverage? These sources are a good place to start.
Florida’s insurance requirement for condominium associations, including the rule that replacement cost must be determined at least once every 3 years, is spelled out in Section 718.111 of the Florida Statutes.
The State of Florida’s first report on milestone inspections, released in July 2026, found dozens of buildings deemed unsafe or uninhabitable and repair costs climbing fast. You can read the full report from the Office of Program Policy Analysis and Government Accountability.
The state also maintains a plain language guide to inspection and reserve study requirements for condominium and cooperative buildings.
Coinsurance is the policy rule at the center of this story. Travelers Insurance has a clear guide showing how claim payments get reduced when a property is insured below its required value.
If you have questions about your association’s replacement cost values, or if it has been more than 3 years since your last condo insurance appraisal, Prestar Services can help. Visit prestarservices.com, or contact Maris Gonzales at maris@prestarservices.com or 727-345-8400.
