South Floridians turn to alternative home insurance - Sun-Sentinel.com

With major coverage companies poised to cast more than place insurance policies this year, Sunshine State occupants will be shopping for alternatives. Two little-known options expected to go more than popular are surplus-lines companies and self-insurance pools. Excess lines and condominium self-insurance pools aren't subject to Sunshine State charge per unit regulations, so they may be cheaper. Another perk is that they're relieve from state fees insurance companies go through to policy holders. But there are risks. If a major violent storm hits, surplus-lines policy holders and condominium or homeowners' groupings that self-insure can't tap the Sunshine State Insurance Guarantee Association monetary fund that assists wage claims when insurance companies fold.

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"They're extremely complex and not easily understood even among coverage experts," Jeff Grady, president of the Sunshine State Association of Insurance Agents, said of unregulated insurers. "People [considering the option] really necessitate to make their prep or confer with with person who understands insurance." That's why a grouping of condominium associations in Palm Beach County hired a adviser and a risk-modeling company when they formed the Palm Beach Windstorm Self Insurance Trust this year. It was one of the first groupings formed under a state law passed last twelvemonth allowing householders and condominium associations to constitute self-insurance pools for windstorm coverage. At Mayfair House condoes on Ocean Boulevard, coverage insurance premiums that more than than doubled from about $150,000 in 2006 to $320,000 in 2007 triggered condominium fee increases. "It shocked me," Beam Smith, a retired manager, said about his monthly condominium bill, which went from $438 to $648 in two years. If it had gone up any more, he said, "I'd be moving and so would everyone else here." That's when Mayfair's condominium board president Toilet Vivenzio, a retired nursing place operator who had experience with wellness coverage pools, started researching the thought of self-insuring. "It was becoming economically onerous," said Vivenzio, president of Mayfair's condominium board. "So we began to look for an option and started banding together." Mayfair joined five other condominium associations for the pool. Now its share of the pool's yearly windstorm coverage cost is $108,000 — a 66 percentage drop. That agency no condominium fee additions this year. The pool purchases enough backup insurance to pay for $194 million in losses. That's enough to cover all edifices in the grouping for an unusually big storm, the sort that is predicted to hit once in 250 years, Vivenzio said. The trust salvages money because "we don't have got a batch of overhead: no corporate jets, brokers, fancy office, or fancy printing," Vivenzio said. "This is an illustration of what can be done when people set together." But if respective major violent storms hit and the pool utilizes up its stand-in coverage, fees could be levied on all condominium owners, Insurance Commissioner Kevin McCarty warns in a missive he have required the trust to direct with any selling stuffs used to enroll more than condos. McCarty urges on individual condominium unit of measurement proprietors to do certain they understand possible fees for their building, if a major violent storm strikes. "There is no warrant of truth or adequateness in predicting events that have got not yet occurred," he wrote. "You, the proprietor should be comfy adequate with the hazard you are undertaking in tax return for the ... savings." In Mayfair, the fees would be one-quarter of 1 percentage of the assessed value of its buildings, which is $39 million or about $437 per resident, Vivenzio said. There's a similar hazard with surplus-lines companies. Regulators can't assist if the companies decline to pay householder claims or drastically raise rates. In many states, surplus-lines companies — such as as Lloyd's of London, 's Lexington Insurance Co., Oregon Nationwide Mutual Insurance Co.'s Scottsdale Insurance Co. — complaint more than regulated insurance companies so they don't compete. But in where mainstream place insurance companies have got backed off because of hurricane hazards combined with aggressive regulation, surplus-lines companies are thriving and offering competitory rates, said Anita Byer, president of Plantation-based Setnor Byer Insurance. "They work in a free marketplace so they can cut down rates" in old age without hurricanes and raise them after hurricanes strike, she said. Most consumers buying surplus-lines place coverage don't cognize that is what they're buying even though insurance companies are required to let on that in the policy, Byer said. Consumers with surplus-lines coverage are typically advised to make so by their agents. Byer said agents in her concern office urge that occupants or business proprietors choose for excess lines when it's cheaper or rated better. Agents in Sunshine State aren't supposed to urge surplus-lines insurance companies to place proprietors who have got insurance options available with regulated insurers. Surplus-lines companies sold about 135,000 residential policies with about $330 million in insurance last year, according to information from the Sunshine State Excess Lines Service Office. Of that, about 23,000 residential policies with about $73.5 million in insurance were sold in Broward, Miami-Dade and Palm Beach counties. Like condominium self-insurance pools, surplus-lines policy holders don't pay fees that aid countervail shortages for state-backed storm funds. But taxations for surplus-lines companies are higher than regulated companies and the newest companies are required to have got about $15 million in assets to assist wage claims. Agents state that , Florida's coverage company of last resort, is often cheaper for residential coverage, but that could change after its charge per unit freezing runs out in January.Consumers should choose for Citizens either way, said , insurance manager of the Consumer Federation of America. "There are really safe surplus-lines companies and their repute depends upon" their client service and paying claims promptly, he said. "There are other fly-by-night companies that are nil more than a station business office box with no assets and they may catch your money. How make you kind out which is which?" Julie Patel can be reached at 954-356-4667 or or 954-356-4667.