Condo Collapse: How widspread is the issue with Florida’s condominiums?
In this excerpt from Florida Pulse, panelists discuss the severity of condominium deterioration across the state and who might be at risk
Rob Landers, Palm Beach Post
- Allstate’s Florida subsidiaries are dropping 33,000 policies.
- The nonrenewals are coming at a particularly fraught time for condo buildings.
- The good news, according to an Allstate agent, is that customers will find more carriers willing to insure them than they would have a few years ago.
Some 33,000 Floridians will be getting notified through next year that Allstate’s Florida subsidiaries are dropping their insurance policies, and some are getting the news during a particularly nerve-wracking time to start looking for coverage: hurricane season.
That reduction decreases Castle Key Insurance and Castle Key Indemnity’s policyholders by about 12% in the state, but last month it 100% wiped out Diane Kline’s more than 12-year history with the company she knows as Castle Key, and it had her rattled, she said.
“I’ve been reading about all the trouble people are having with their insurance,” said Kline, 50, who works with her husband, an electrician.
Florida property owners have the highest average premiums in the country, which some describe as the perfect storm of weather, litigation and spooked financial companies willing to insure some of insurance companies’ risk.
Allstate, based in Illinois, did not respond to questions about the nonrenewals in Florida when contacted. A spokesperson for the Florida Office of Insurance Regulation said Allstate notified the state about the nonrenewals in December and that it would begin telling its policyholders in April.
There’s some good news, though, with condo nonrenewals
The good news, according to Zack Lansat, a Lake Worth Beach Allstate agent at Lansat Liability Insurance Group, is that customers will find more carriers willing to insure them than they would have a few years ago.
Between 2021 and 2022, seven insurers left the state. In the last year, since the Legislature has taken measures to limit lawsuits, eight new insurers started writing property insurance policies.
“Overall, it’s much better. … Policies are more expensive, but you have more carriers,” said Lansat, estimating he has “hundreds” of clients affected by the nonrenewals, with about 90% of them living in condos.
Kline, who lives in Morriston, halfway between Ocala and Gainesville, said she was pleasantly surprised when her new company, Tower Hill, came in at a premium that was 36% less than her Castle Key policy.
Allstate notified state officials that its dropped policyholders would be getting automatic quotes from Monarch Insurance Co., but Lansat said he’s been checking out other options beyond that one.
“The newer the condo, the more options you have,” Lansat said, on what awaits customers checking out replacement policies.
Generally, insurance companies don’t write for new business until hurricane season ends Nov. 30, unless it’s a customer who has been dropped or who just bought a new house.
Even with a bigger market, though, other worrying signs have appeared on the horizon, besides a hurricane season of potentially historic proportions. Cypress Property & Casualty Insurance Co., based in Jacksonville, stopped writing policies for Broward, Miami-Dade and Palm Beach counties this week, Lansat said.
That happens when a company decides it has taken on enough risk in certain ZIP codes or counties, Lansat said.
Why now is a danger time for condo building insurance
Allstate’s policy reductions are coming at a particularly fraught time for condo buildings in general, said Michael Simon, a real estate lawyer who lives in a beachside Boca Raton condo.
In reaction to the condo collapse in Surfside that killed 98 people, the state passed legislation that imposed new rules on condos that have sent — or will be sending soon — assessments skyrocketing.
Simon was called in to help a Delray Beach condo association that had insurance on some of its buildings canceled because many of its roofs were approaching 15 years old, even though the roofs were guaranteed for 20 years. Simon opted not to renew his personal wind insurance once his mortgage-holder said he could let it lapse, even though it had been required earlier.
“This year, when I got my bill, the windstorm (insurance) was going to be prohibitive,” Simon said. “Instead of paying like $2,000 a year in insurance for your condo interior — this isn’t for the building, this is for inside your condo — it was going to be like $10,000.”
Lansat said the average premium his condo customers are paying has increased from $1,000 to $1,800 annually over the last few years. He estimated that he was able to get new policies for about 75% of those who got dropped.
“Some of them elect to sell their property or they are self-insuring,” he said.
Anne Geggis is the insurance reporter at The Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at ageggis@gannett.com. Help support our journalism. Subscribe today.
