Paying the premium

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Article published Mar 5, 2006

Paying the premium Insurance rates balloon for condominium groups RICK CUNDIFF STAR-BANNER Mary Johnson is the secretary and treasurer for the Plantation Oaks Condominium Association at 821 S.E. Third St. in Ocala. Plantation Oaks had its insurance, required by law, canceled in February by the underwriting company. Its new insurance premium is $12,000 a year. It had been $1,800. ERICA BROUGH/STAR-BANNER ERICA BROUGH/STAR-BANNER As secretary/treasurer of the Plantation Oaks condominium board, Mary Johnson expected the cost of insurance to go up this year. "We were notified in October," she said, "that Allstate would not be renewing our insurance." But as the mid-February deadline to renew approached, Johnson and her fellow Plantation Oaks residents were in for a shock. Their insurance for the common areas, which cost $1,800 last year, jumped to $12,000 this year. "We knew the insurance was going up, but we never dreamed it would go up as much as it did," Johnson said. "We just weren't prepared for that. We were also told by insurance agents that that was a good price." Others fared far worse. Fairways Condominiums #7, a 208-unit development, also was insured by Allstate. When the company announced last fall that it was dropping condominium insurance in Florida, treasurer Beverly Zielinksi and others board members scrambled to find other insurance. They ended up with Citizens Insurance, the state-funded insurer of last resort. "Our last premium (with Allstate) was around $20,000," Zielinski said. "Now we have $100,820." Heritage Management, which manages several condominium complexes in the Ocala area, has seen insurance increases of four to five times what complexes paid last year, said company controller Joe Fante. Complexes that once saw insurance costs of $125 to $150 per unit per year now are "somewhere between $400 and $500 (per unit) per year," Fante said. "Obviously, nobody likes it, but everybody understands we've had hurricanes come through here," he said. As it is for owners of single-family homes, rising insurance costs are an increasing concern for condominium owners throughout Florida, even in interior counties such as Marion. "Obviously rates are going up. That's what eight hurricanes will do to you," said Sam Miller, executive vice president of the Florida Insurance Council, an industry trade group. The eight hurricanes which struck Florida between August 2004 and October 2005 caused insured losses of $30.5 billion, according to the Florida Department of Financial Services . "After the last few years, eight hurricanes in two seasons, and they've hit all parts of the state, rates are going up everywhere," said Beth Scott of the state Office of Insurance Regulation. Mary Johnson with the Plantation oaks Condiminium Association and Lee Hanks, both residents and owners at the complex, discuss landscaping. Insurance rates for the condiminiums have risen dramatically in the last year. ERICA BROUGH/STAR-BANNER Some insurers have decided it's just too much risk. Nationwide stopped writing new homeowners' policies in Florida at the end of 2005. "It's part of our effort to manage our exposure in the state of Florida," said Nationwide spokesman Joe Case. "We are trying to take steps we feel will ensure our long-term stability and keep our promise to current Nationwide policyholders across the nation." Allstate decided to leave the commercial property market in Florida because it was a very small part of the company's business, said spokesman Ryan Priest. "In Florida, when it came to commercial lines, we were an extremely small player, about three percent of the market," he said. While the hurricanes of 2004 did factor into Allstate's decision, they weren't the deciding factor, Priest added. Condo residents, like other homeowners in Florida might as well get used to the idea of paying more for insurance, said Richard White of Winter Haven, a columnist who writes on condominium and housing association issues.. "Insurance is a business. The bottom line, they've got to make a profit," he said. "Yes, associations are having problems with the high premiums. The associations are going to have to increase their fees." For some, such as Fairways, that's already happened. The fivefold rise in insurance cost meant the association had to raise monthly fees by more than 15 percent, Zielinski said. "A lot of our residents are senior citizens. I'm sure it's affected their budgets," she said. The issue's not over for Zielinski and her fellow Fairways residents. The association's contract with Citizens is for only one year. "I don't know the answer," Zielinski said