Print

Email story

Comment

Email editor

Buyers shocked by cost to insure

Hurricane exposure and sinkhole fears have tripled insurance premiums along coastal Pasco. Sticker shock has many potential home buyers pulling out of deals at closing time.

By JAMES THORNER
Published May 29, 2005

HOLIDAY - Whacked by property insurance increases, Roger Daleiden is a new Floridian who could become an ex-Floridian.

After agreeing to sell his house of two years in Clearwater, the retiree contracted to buy a 1,400-square-foot house in Pasco County's Beacon Square neighborhood.

As closing approached this month on the Pasco house, Daleiden got blindsided. He learned insurance on the new house would be $3,000 a year, triple what he paid on the similarly sized Clearwater house.

He walked away from the Pasco deal, and lost his $1,000 deposit. Now he's got no place to live in Florida. His old town in Wisconsin beckons.

"I just told my agent to forget it. It's unbelievable," Daleiden complained. "I thought homes were supposed to be less expensive in Pasco."

Thanks to the four hurricanes that raked Florida last year, insurance is up across the Tampa Bay area. But nowhere does it appear worse than in the coastal communities of west Pasco.

A combination of hurricane exposure and sinkhole fears are sending property insurance rates into the stratosphere. But it's not just owners of expensive waterfront homes getting socked anymore.

As in the case of Daleiden, buyers of humble two- and three-bedrooms built for retirees in the '60s and '70s have to pay a ransom, too. To the chagrin of the real estate industry, deals on those properties have collapsed left and right.

"We're getting people for the first time ever reneging on contracts, blown away by the insurance rates," said Clearwater insurance agent Gordon Czernecky.

Czernecky owns Shield Insurance and writes policies up and down the Pinellas and Pasco coasts. He handled at least three recent Pasco deals that disintegrated when insurance spooked buyers.

It's worst west of U.S. 19, where most homes require coverage for wind and flood in addition to the standard homeowner's policy.

Private insurers have largely skedaddled, thrusting buyers into the higher-priced state pool, Citizens Property Insurance.

"It's going to start stymieing the real estate market," Czernecky said. "It's finally hit the fan."

Almost all of the busted deals involve Citizens. The state pool is insuring an ever bigger chunk of Pasco, from 31,946 policy holders at the start of last year's hurricane outbreak to 38,970 this month.

As the insurer of last resort for people who can't get coverage from the private market, it is mandated to charge more than the Nationwides and Mercurys of the world.

Many private insurers have all but red-lined whole Pasco ZIP codes on account of sinkhole risk. Citizens picked up the slack. Then hurricanes arrived to wreak havoc on rates for wind and flood coverage.

Citizens spokesman Justin Glover blamed the swollen rates mostly on private insurers, the companies Citizens must always by law exceed in price.

Sam Miller, spokesman for the state insurance industry, conceded private insurers have been dropping Pasco customers in the face of what he called "sinkhole reporting abuse."

But he disagreed about passing most of the blame to private firms. Citizens carries a half-billion-dollar deficit. Its rates reflect its financial standing, Miller said.

"The reason Citizens rates are as high as they are has to do with the risk Citizens has," said Miller.

Miller pointed out that Tampa Bay area homeowners are getting a dose of what Miami homeowners got after Hurricane Andrew in 1992, when rates in south Florida tripled.

In any case, the rates are getting mighty uncomfortable.

Tony Ulanitis got a dose of sticker shock last month. He's a Realtor from Pinellas who found a house for an airline pilot in New Port Richey's Hunter's Ridge neighborhood.

The good faith estimate, a document that's part of the sales process, assumed insurance would cost $1,500 on the 2,100-square-foot house. As closing approached, Citizens spit out an actual figure, $3,600.

"It was a shock to me. I almost fell off my chair," said Ulanitis, who's considering putting exact insurance disclosures in future contracts. "You don't want your clients mad at you because you didn't tell them it would be so high."

Shelita Stuart, an agent with Walden Insurance Network in Port Richey, has grappled with kill-the-messenger syndrome as she informs coastal dwellers of Citizens' rates, including wind insurance charges that recently doubled.

A recent example: The owner of a $300,000 house learned his premiums would exceed $5,500 for wind, flood and homeowner's insurance.

But it's the owners and buyers of inexpensive concrete block houses in neighborhoods such as Holiday Lake Estates and Beacon Square who arguably suffer the most.

The homes were built cheaply 30 years ago to house blue-collar retirees from up North but have become a magnet for low-income younger families priced out of Tampa and St. Petersburg.

Insurers consider those old houses, exposed on the coastal plain to wind and storm surge, to be high risk. Monthly insurance bills can be $200 to $300. Depending on how much money a buyer puts down, insurance can surpass the mortgage payment itself.

And even if they can afford monthly payments, many buyers complain they don't have the $2,000 to $3,000 to pay the first year's insurance premium up front at closing. Agents report couples breaking down in tears when they had to walk away from their dream house.

"It's very difficult to find a premium less than $2,000 in west Pasco," Stuart said. "Everyone from from Hudson to Holiday to Tarpon Springs has the same problem. It doesn't matter the size of the house."

James Thorner covers growth and development in Pasco County. He can be reached at 813 909-4613 or toll free 1-800-333-7505, ext. 4613. His e-mail address is thorner@sptimes.com

[Last modified May 29, 2005, 01:05:19]