Insurance Collapse of a Florida High-Rise

COLLAPSE OF A FLORIDA HIGH-RISE

For multi-residential building owners, insurance implications are inevitable

by Andy Schwartze

The recent collapse of a high-rise residential building in Surfside, Florida, is an unimaginable tragedy that sadly underscores the importance of structural safety and the drastic consequences that could result if exposure to moisture goes unchecked. Though investigators have not yet revealed the precise cause of the collapse that killed at least 97 people, a 2018 engineering report indicated that the 40-year-old complex had multiple structural deficiencies.

Make no bones about it: this tragedy will create an aftereffect, not only in the way condominium corporations and private apartment building owners are regulated as to the structural safety of their buildings, but also in the world of insurance company underwriting. Underwriting is a reactive business. There are no crystal balls enabling us to predict what will happen in the future, so instead we wait for events to happen and then adjust our ‘risk avoidance’ strategies accordingly.

In the case of the Champlain Towers South, it is likely that the salty ocean environment played a role in weakening the structural integrity of the building. The 12-storey condominium tower had partially collapsed on June 27th before the remaining structure was demolished late on July 4th to expedite search and rescue efforts ahead of Tropical Storm Elsa.

Exposure to moisture: a threat

It has always been known that concrete cures forever, albeit at slower rates as time passes. Concrete relies on structural steel for its strength and conversely the steel beams and reinforcing rods rely on the concrete for protection from rust and corrosion. When regularly subjected to a professionally managed waterproofing program, the lifespan of this tough team can last for a very long time. On the flipside, when corrosion occurs due to prolonged exposure to moisture and a lack of regular care, the structure develops weaknesses that can be detrimental.

The combination of shifting and vibration, when applied to aging structural components that have been exposed to serious moisture, is a threat to certain types of buildings—in particular, those with below grade infrastructure, like parking facilities. While salt moisture accelerates this process, which is clearly worse in coastal areas, like Florida, road salt brought into parking garages here in Canada during the winter can also be destructive.

In other words: no matter where your building is located, early detection and remediation needs to be a priority. In fact, I once had a client lose an entire underground parking deck after it separated from the support pillars, the result of winter salt buildup and some unexpected road work creating vibrations in front of the building. Thankfully, no one was hurt, but an important lesson was learned about the importance of being proactive with building maintenance. Unlike weather-related disasters, which cannot be avoided, failures due to structural deficiencies can.

A sad case such as this one in Florida will prompt high-rise building underwriters to demand more accountability with respect to maintenance programs intended to provide early detection and remediation. It is still too soon to try to predict how the insurance underwriting world will react to this horrible event but react it will—eventually.

For questions regarding multi-residential housing insurance, please visit: www.takecover.ca

Compensation for Surfside collapse victims

Victims and families who suffered losses in the collapse of the Champlain Towers South building will get a minimum of $150 million in compensation initially, according to the judge at the hearing held on July 21, 2021. That sum includes insurance on the condominium and the expected proceeds from the sale of the Surfside property where the structure once stood.

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