Article Courtesy of  The St. Petersburg Times

By Tom Zucco

Published February 2, 2006

If there's a face to Florida's mounting property insurance crisis, it's usually the owner of a single-family home who's been dropped by a private carrier and faces double- or even triple-digit increases through state-run Citizens Property Insurance.

Those homeowners, however, are far from alone.

Condominium owners are facing the same dilemma, many times without realizing it.

Not only are insurance rates soaring for condo owners, the added costs are often hidden, rolled into the unit owner's maintenance fee.

And if deductibles have been set too high and the association's pool of extra money has been depleted, the owners can face one-time assessments of $1,000 or more.

That's on top of rising insurance rates for the contents of the unit - everything from furniture and clothes to appliances and art work.

The Tampa Bay area is home to tens of thousands of condo owners, the vast majority of whom live in buildings miles away from the water.

Places like Misty Springs in Countryside. The complex has 114 units in Phase 1 and 120 units in Phase 2. Phase 1 had been insured by Allstate for 17 years. But last fall, the company dropped it.

Premiums in the condo complex rose from $32,502 a year to $81,783 with the new carrier, Empire Insurance, an increase of 152 percent.

But that wasn't all. The premium was due in January, and the condo association had about $8,000 in reserve. As a result, residents had to borrow the remaining $73,000 to cover the bill.

Jim Kinnaman, a retired police officer from Maryland, has lived at Misty Springs for 18 years and is president of the Phase 1 Condo Association. The association, he said, is working on a plan to increase its reserve for next year.

"But everybody's going to have an assessment," Kinnaman said. "We're each looking at $1,000 this year.

"I have neighbors on the verge of having to move. We have a lot of elderly people here living on Social Security and their savings, and if gets any worse, some of them are going to have to leave, too. It's going on all over the development."

Kinnaman, 73, said most of the residents' individual homeowner's insurance has been canceled, forcing them to sign with Citizens, the insurer of last resort.

"We're paying anywhere from $500 to $1,500 just to insure the interior of the unit."

Woodbridge, a 77-unit condominium in Seminole, faces similar strife. After losing its carrier last year and switching to Citizens, the condo complex's premium rose from $66,104 a year to $114,303, a 73 percent increase. The average condo owner is paying more than $1,480 a year for insurance.

And at Antigua, a 48-unit complex in Largo, the insurance bill rose from $13,578 last year with Allstate to $35,756 this year with Citizens, a 163 percent increase. Each owner will be assessed $800 to make up the difference.

"That's going to stress some people," said condo association president Jerry Donahoe, "because we're not a wealthy condo out on the beach. We're pretty much ordinary working folks and some retirees."

What's happening, insurance experts say, is the same thing that's occurring in the single-family market. Private insurers are disappearing because of the risk, and with no one left, condo owners must turn to Citizens.

"The biggest question I get is whether I can bid the insurance," said Tom Reardon, vice president of Progressive Management Inc., a property management company in Palm Harbor that represents 102 condo associations with about 11,000 units in the Tampa Bay area. "The answer is no. The market is gone."

By this time next year, Reardon predicted, most condo owners in the Tampa Bay area will be paying an average of between $800 and $850 a year for common area insurance, up from between $225 and $400 per year.

The question, Reardon said, "is how much will the consumer take before they stand up and revolt?"

Not all of the blame, some experts say, can be laid at the feet of the insurance companies.

"The problem is because the boards, the decision-makers, decide if you're well-insured or not," said Jan Bergemann, president of Cyber Citizens For Justice, Inc., an advocacy group for condo owners. "It all goes well until a hurricane hits. Then people find out they weren't properly insured.

"We have seen special assessments as high as $10,000 per unit. If you're a retiree, that's a lot of money.

"Homeowners deal with it themselves directly. Many times condo owners don't know what the policy says. They never see it, and as long as there's no damage, they're happy."

Area condo owners are paying the price of a long-term trend: insurers refusing to write or charging higher rates to cover the risk of hurricane or sinkhole damage.

"We broke five or six records for hurricanes last year," said Barry Scarr, an insurance agent and past president of the Suncoast Chapter of the Community Association Institute, a national advocacy group. "That sent chills throughout the industry."

Scarr hopes the Legislature doesn't overreact to the crisis.

"The best thing they can do is let the market settle itself. I'm hoping a lot of smaller companies come in and take smaller bites," he said.

Others have suggested letting private insurers write traditional insurance coverage for fire, theft and regular wind damage, while a state fund would cover hurricane and sinkhole damage.

Most property insurers have stopped writing policies in high- risk areas, including Pinellas County, considered by most insurance experts as one of the most dangerous areas in the nation.

"It's a peninsula hooked onto a peninsula," Scarr said. "It has the densest population and the highest ratio of property values to land of any county in the state. It's all tightly packed in, and that's one of the big problems."

Especially, Scarr said, when the law of averages is factored in.

"The last time a hurricane hit Pinellas was in 1921," he said. "But there was nothing here. If a Category 4 or 5 storm hit Tarpon Springs from the southwest today, all of Tampa Bay would be flooded. "The thinking is, we're due."