Article Courtesy of The Sun Sentinel

By Marci Shatzman
Published  August 27, 2006

Jerry Kaye found out the property insurance bill for The Cascades had nearly tripled just days before it was due on Aug. 5, sending sticker shock waves throughout the adult community. The annual premium soared from $45,000 to $129,000.

"That was the good news," said Jerry, who has been president of the master board for more than three years.

The development of 928 homes west of Boynton Beach had collected about $85,000 in damage from Hurricanes Jeanne in 2004 and Wilma in 2005. Now things that had taken a big hit, including outdoor lighting, fencing and irrigation, would no longer be covered. The new policy just covers the buildings -- the clubhouse, fitness and tennis centers, and the freestanding restaurant they call the cafe.

"That's the bad news," Jerry said.

To make matters worse, their deductible went up from 2 to 5 percent to $200,000, because the clubhouse appraisal rose from $3.1 million to $4 million in the last year.

"We became self-insured," said a glum Jeff Schaefer, treasurer of the master board and chairman of the budget and finance committee.

Last time, residents were assessed just $190 after the hurricanes. So when Schaefer's committee met in special session Aug. 1, residents did the math, and a few of them were "up in arms and felt the board hadn't told them until the last minute," Jerry said. The former broker sent the proposal last minute, but that became a side issue.

The main issue: What are they going to do now?

Jerry said he considered not renewing, but their lawyer advised them that residents could sue the board for not carrying out their fiduciary duty. And they couldn't shop around; their last insurer, Philadelphia Insurance Companies, dropped them and American Strategic Insurance picked them up. To his knowledge, ASI is the only firm writing policies for homeowners associations, except the state's Citizens Property Insurance Corp.

Bob Lotane, spokesman for the Florida Office of Insurance Regulation, said that fact is difficult to confirm, but he wasn't surprised to hear it.

Jeff said his committee allowed for an insurance rate increase in 2006 "because our gut feeling was there would be one," but they approved the budget before Wilma hit.

Burt Dukoff, a board member and chairman of the insurance committee, decried the increases and the fact the community is now assuming liability for everything but the buildings.

"It's not easy for the board to present this to a community that has a fixed or limited income," he said.

On top of that, residents still are responsible for insuring their own homes.

Jerry thinks an unspecified budget surplus and prudent spending may save them in the end this year. The board doesn't intend to levy a special assessment, but the maintenance fee could possibly go up by $25 a quarter, he told about 50 residents at a regular master board meeting Aug. 17. There were a few dissenters on the insurance issue, but the motion to accept the increase carried.

Lotane said eight hurricanes and 2.8 million claims created what he called a global re-insurance crisis for the state. The state is looking into sharing some risk, he said. It wouldn't write policies, but would contract with companies that are, he said.

He welcomes homeowners associations to e-mail his office about rate hikes or the inability to find coverage at any price at [email protected]. Put `homeowners association' in the subject line, he said.

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