By DOUG CARMAN

SEBRING — The Florida Office of Insurance Regulation advertised a reduction in homeowners’ insurance averaging more than 20 percent when the state forms its public reinsurer, under the ongoing reforms.

Many condo owners, however, will lose their coverage before they see any of that, if they haven’t lost it already.

With most of the major insurers still pulling out of the commercial residential market, which includes condominium insurance, some fear the recent legislation is being rendered worthless for the condo residents as they resort to Citizens Property Insurance, the state-ran insurer of last resort.

Bob Domako, who owns a condominium unit in the Fairway Village in Sun ‘N Lake, said his insurance agent anticipated a 20 percent higher rate for the condominium policy.

“That goes against the grain of everything we read in the media,” Domako said.

A Few Loopholes

George Hensley, an insurance agent with the Heacock Insurance Group in Sebring, said the reductions applied only to the wind damage portions of the insurance policies. Furthermore, for larger insurers like Allstate and State Farm, a more realistic deduction would be around 7 percent to 9 percent in the premium.

“The whole thing was misleading,” Hensley said, referring to the earlier coverage on the expected reductions.

Condominiums use two different insurance policies. One applies to individual units, which are purchased by the residents and protects the interior property. The second, a commercial residential policy, applies to the entire building and is paid through a property owners association. Typically, a maintenance fee charged to each resident of the condominium covers that other insurance.

An emergency order that went into effect Jan. 31 also prohibited insurers from raising rates beyond a set factor, while at the same time preventing insurers from canceling personal residential properties.

However, commercial residential policies could still be cancelled, and some insurers are doing so.

Running Out of Options

A list provided to Highlands Today from the OIR shows only two major insurers with a substantial number of policies remaining in the state’s commercial residential market, other than Citizens.

“The ones that wrote substantial amounts (such as) State Farm and Allstate are in the

process of non-renewing several of them,” OIR spokesman Bob Lotane said. State Farm, which is one of those two major holders, stated that it will be withdrawing from the market completely.

Domako said his insurance company, Hanover, prepared to drop his policy by notifying him just before Jan. 31 when the emergency order took effect. After repairing the building’s roof and after several phone calls, he said he managed to salvage his coverage and get a renewal.

Ian Wilson, the property manager for The Bluffs of Sebring, was not as lucky. Allstate dropped the Bluffs of Sebring Condominium Association’s policy at the end of 2006, forcing him to take a Citizens policy.

“There has been no other option,” Wilson said.

Wilson added that the insurance budget rocketed from $80,000 for 2006 to roughly $300,000 for the current year. To cover this, after digging into the treasury to cover part of the expense, the association gave the condo residents one-time access fees ranging from $700 to more than $1,000 to cover the balance.

Even for those who are holding onto their policies, prices are not yet remaining stable.

Bob Zorn, the treasurer of Fountainhead Condominium Inc., said the cost for the condominium’s policy was more than 10 percent higher this year, even though he declined to specify the name of his insurer or the exact cost.

“We did have to make adjustments,” Zorn said, but then he down-played the impact. “Everyobdy complains about the rising costs, just as everyone complains about the higher city taxes.”