insurance rates alarm condo owners
Article Courtesy of The Orlando Sentinel
Jerry W. Jackson
Published August 1, 2006
Perez fights back tears as she considers packing and leaving the condominium
she has called home for nearly a decade. Soaring insurance costs are forcing
her to think about selling.
"This has turned my life upside down," she said after learning
that the new association fee covering insurance and other costs for her Lake
Villas condo in Altamonte Springs is $5,502.
Perez and other condo owners in the 71-unit complex on Lake Orienta each
face an insurance bill averaging $2,779 -- up from $478 a year ago. That
works out to more than $200 a month per unit -- and doesn't include coverage
for a unit's interior or its contents. The premiums for those inside
policies, similar to renters insurance, are going up, too.
Florida's property-insurance crisis has hit home for the state's 22,000
condominium complexes and its 1.25 million condo owners, even those far from
the coast where hurricanes make landfall. After eight hurricanes in two
seasons, insurers in Florida are dropping coverage, raising premiums or
"I feel overwhelmed by this," said Perez, a 54-year-old single
mother with a 16-year-old daughter. She has refinanced her mortgage to pay
for this year's higher assessment at Lake Villas, but the hefty insurance
premiums are here to stay, she noted, and that has her wondering just what
"I thought I'd be here forever," she said ."Now I'm going to
have to see [about selling] to get out from under this. Insurance is what's
Condominiums have always pitched the carefree lifestyle, with swimming pools
and shared amenities, but also the pride -- and equity appreciation -- of
Now condo-association meetings are tense affairs, dominated by talk about
the latest rate increase and how owners might tap equity loans -- not for a
nice ocean cruise or new furniture, but to pay their insurance, said Fred
McKenna, a Lake Villas resident and member of its association's insurance
Lake Villas and many other condos statewide have been dropped by their
carriers, forcing them to turn to Citizens Property Insurance Corp., the
state-backed insurer of last resort.
Citizens, by law, must charge higher rates to avoid competing with
for-profit companies. And Citizens offers less coverage for the money.
After being "non-renewed" by Nationwide, Lake Villas cobbled
together coverage on the eve of this year's hurricane season from Citizens
and three other companies, including Lloyds of London, the famous high-risk
insurer. But no one, including the association directors who signed off on
the coverage, is happy with the higher costs.
"It's gotten much more complicated -- and expensive," said
McKenna, noting that condo boards are required by law to make sure all
jointly owned property -- the roof and exterior, for example -- is
adequately insured. That leaves the boards little or no negotiating room.
Units can't be bought or sold without the coverage.
Lake Villas' total insurance bill surged from $33,902 last year to $197,276
this year, even though the deductible for wind damage was boosted from $500
per building to an average of $26,000 per building.
That means the 14-building complex could sustain hundreds of thousands of
dollars in damage from a hurricane and still have to pay every penny of
repairs, on top of its higher premiums, said Ray Floyd, a longtime resident.
"We've been hit with this outrageous rate, and for essentially no
coverage. It's catastrophe coverage, is all it is, " said Floyd, a
retiree who lives half the year at Lake Villas and half the year in New
"This makes it less desirable to live in Florida," he said.
"At least property taxes are deductible, but insurance is not. I'm
going to have to make a choice," he said, between staying in Florida or
For coastal condos, the horror stories of high insurance bills are even more
commonplace, said Harry Charles, president of the Space Coast Condominiums
"Everybody is having a problem of one nature or another," said
Charles, whose nonprofit group is an umbrella organization for 262
associations, mostly condo groups in Brevard County.
One condo association that he heard from, he said, faces an insurance bill
this year of $167,000 -- a more than fivefold increase from $29,000 a year
ago. Other condos are reporting fourfold increases.
The 167-unit Cocoa Beach condo that Charles lives in has been lucky so far,
he said, with a 31 percent increase in its premium this year and no change
in its private carrier.
But the deductible has been raised to about $1 million, or 4 percent of the
$25 million value for three buildings. It's a hefty bill that the condo
owners would have to split if hit by a storm.
"Every year, for years, we've had an insurance crisis, but it has
gotten worse," Charles said. Many condo owners unfairly blame Citizens,
The state-created company "is just trying to do its job," he said,
with limited resources and a growing number of policies. Citizens recently
became the largest insurer in the state, absorbing clients formerly insured
by Tampa-based Poe Group, which went bankrupt, and thousands of other
policyholders who were not renewed by their private carriers.
Citizens spokesman Rocky Scott said the company is helping to keep the condo
market -- and the homeowners' market in general -- alive in Florida by
writing coverage that no one else will offer.
Though more condos are turning to Citizens, he said, the numbers "are
not excessive. We're not seeing a great flood," but a steady, and
"We're the only source [of insurance] along the coast," Scott
said, and increasingly in the interior of the state as well.
Rob Tallent, an agent with Peoples First Insurance, which put together Lake
Villas' new insurance package, said many condo associations throughout
Florida have been "totally shocked" to find they can get little or
no private coverage for wind damage -- even many miles inland.
"That was never a problem before, in the interior of the state,"
Tallent said. "Now it is."