Florida Community Association Manager Practice Exam

Under what condition is a condo deemed ineligible for wind-only coverage?

1. When 25% of units are rented

2. When 50% or more of the units are rented more than eight times a year

3. If all units are occupied year-round

4. When less than 50% of units are rented

The correct answer is: When 50% or more of the units are rented more than eight times a year

A condominium may be deemed ineligible for wind-only coverage primarily based on how frequently the units are rented. In the case of the selected answer, when 50% or more of the units are rented more than eight times a year, it creates an increased risk profile for the insurance provider. High rental turnover can lead to various concerns, such as increased maintenance needs, higher chances of damage, and a potential rise in claims. Insurance companies typically assess risk based on occupancy and usage patterns, and frequent rentals can indicate instability or lack of overall control over the units. In contrast, if fewer units are rented or if units are occupied year-round, the associated risks would generally be lower, making those properties more favorable for wind-only coverage. Therefore, the condition involving significant rental turnover aligns with the criteria insurers might use to determine eligibility for wind-only coverage, resulting in the choice being the most accurate.