At last, a little relief on home insurance

Article Courtesy of The St. Petersburg Times

By Tom Zucco
Published September 14, 2007

After watching their maintenance fees soar out of sight, Florida's nearly 1.5-million condominium residents are finally starting to see some relief, thanks to a change in state law that demands insurance companies list a specific range of discounts for making buildings - including condos - more hurricane resistant.

Regulators went even further and required a doubling of the discounts, but the insurance companies, including state-backed Citizens, are negotiating with the state over just how steep those added discounts will be.

Just don't ask who's paying for all this.

The first round of discounts are welcome news to people like Pinellas County's Jim Kinnaman, president of the Phase 1 Condo Association at Misty Springs condos in Countryside.

The owners of the 114 units in Phase 1 owed Citizens $93,213 for their 2007 property insurance coverage. A rate rollback put $6,474 in their pockets, and mitigation discounts gave them an additional $12,065.

So the association's $93,213 premium became a $74,674 premium - a savings of $18,539.

"A very big help," Kinnaman said. "With all our other expenses, it won't mean a big drop in monthly maintenance fees. But at least it won't go up."

That's one edge of the sword.

Here's the other: The bulk of the money that's being returned to condo associations is coming from the state of Florida.

While the owner of a single-family home could see an average savings of a few hundred dollars, the biggest discounts - some as high as $50,000 - go to condos.

About 70 percent of Florida homes are insured by nearly 200 private companies. About 80 percent of Florida condos are insured by one company: Citizens.

Not only does Citizens have to serve up hefty discounts on properties private insurers abandoned; Citizens can't compensate for that lost revenue by raising rates somewhere else or dropping policies, two tactics private insurers often use.

Citizens' rates are frozen until 2009, and it can only drop a policy if the premium goes unpaid.

The total amount of discounts Citizens has paid this year is not yet available, said company spokesman Rocky Scott. But Citizens has already refunded $160-million this year after the Legislature ordered it to roll back its rates to 2006 levels.

"The mitigation credits are probably the single biggest way to reduce what you pay for insurance," Scott said. Such credits will reduce Citizens' revenue, but the impact is not significant on an organization that will collect close to $4-billion in gross premiums this year, he added.

While discounts are centered on the age and condition of roofs, property managers say most condos don't need an extreme makeover to get money back.

"It's mostly regular scheduled maintenance," said Tom Reardon, vice president of Progressive Management Inc., a property management company in Palm Harbor that represents more than 100 condo and homeowner associations in the Tampa Bay area.

"Some of the associations had as much as 400 percent increases in maintenance fees last year," Reardon said. "And now they're finally getting something back."

Reardon said inspectors pay close attention to the type of roof, its shape and how it is attached to the walls. Inspections typically cost about $250 for the first building and about $100 per building after that.

Although an inspection can cost $4,000 or more, condo and homeowner associations are jumping on the mitigation train.

Citizens originally charged the 139-unit Chateau Woods Condo Association in Clearwater $132,580 for its 2007 coverage. But the rate rollback returned $7,761, and the mitigation discount returned $24,806 more.

"It means quite a bit," said Chateau Woods board president Joe Lafaso. "We don't have to raise maintenance fees this year like we've done the last three years. We're very happy."

Kim Gilkey, the property manager at 295-unit Lake Forest Condominiums in Pinellas Park, said the condo board there is considering taking the $35,400 it will get back from Citizens and paying down some of its debt.

"We had to borrow $237,000 last year," Gilkey said, "to pay for our insurance."

What can condo owners do?

- Check with your condo association board of directors to see if mitigation discounts have been applied for.

- If so, ask for a copy of the mitigation form and submit it to your insurance agent for possible additional credits on your unit owners policy.

- If you have questions about your Citizens policy, call the state-run insurer toll-free at 1-877-227-3492.