Article Courtesy of The Orlando Sentinel

By Jerry W. Jackson
Published  August 1, 2006

Robin 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 both.

"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 to do.

"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 killing me."

Condominiums have always pitched the carefree lifestyle, with swimming pools and shared amenities, but also the pride -- and equity appreciation -- of homeownership.

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 committee.

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 Jersey.

"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 selling.

For coastal condos, the horror stories of high insurance bills are even more commonplace, said Harry Charles, president of the Space Coast Condominiums Association.

"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, he said.

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 growing, stream.

"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."

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