The board of Citizens Property Insurance Corp. has approved a 2.07 percent assessment for Florida homeowners to cover losses from the 2005 hurricane season. The charge amounts to $20.70 on every $1,000 in property insurance premiums.

The assessment would have been larger, but state lawmakers in May agreed to pay $715 million to help cover the state-run insurer of last resort’s $1.7 billion in losses.

With 1.2 million policies, Citizens is the state’s largest provider of the necessary evil we call homeowners insurance. Teresa Badillo was shocked to learn that the insurance premium on her home west of Boca Raton had more than doubled to $5,050 per year.

And she was none too pleased about the terms of the payment plan offered by Citizens: Pay half now and the other half in 60 days.

“That’s a great payment plan, isn’t it?” Badillo said sarcastically.

Add that on to already-soaring Florida mortgage payments and you have a lot of people scrambling to pay the bills. Rocky Scott, a Citizens spokesman, acknowledged that the plan scarcely, if at all, provides viable assistance to homeowners hit with high premiums as a result of the destructive storm seasons of 2004 and 2005.

“That’s something we’re in the process of changing. What we’re trying to do is make insurance premiums more manageable for folks,” Scott said.

With Citizens’ prices, property taxes, mercurial energy prices, and the monthly costs of Florida home loans (for those with adjustable-rate mortgages) expected to keep rising, budgeting will become crucial for strapped homeowners.

“It’s easier to budget if you can pay it monthly, instead of all at once,” said Robert Hunter, the insurance director at the Consumer Federation of America, in an interview with the Palm Beach Post.

With the Florida housing market in a state of flux, the much-maligned Citizens has yet to decide the details of payment plans, such as whether payments would be made quarterly, monthly or twice a year. That task is just one more for the company, which officials say is understaffed as its policy count has soared.

Unlike Citizens, private insurers — who actually have to be competitive — tend to offer more generous payment plans. State Farm and Allstate let customers pay monthly for a fee of $1 a month.

At Allstate, only a third of policyholders use the payment plans. That’s because most Florida home mortgage lenders require escrow accounts that force homeowners to set aside money every month for property taxes and insurance. The homeowners who use payment plans typically don’t have mortgages or don’t have escrow accounts through their lenders.

Badillo and her husband decided this year to pay their premium all at once because their policy briefly lapsed. They were dropped by their former insurer, Tower Hill, and the policy ended just as Tropical Storm Ernesto hit and insurers suspended writing new policies.

An editorial in today’s South Florida Sun-Sentinel lambasts the state-run “insurer of last resort” for its new rate allocations.

The author, a concerned resident, does not believe homeowners in low-risk areas should be forced to subsidize the property insurance rates of those in high-risk areas. For this reason, the provisions of Citizens Property Insurance Corp.’s “takeout program” are totally unfair.

No Citizens policyholders should be required to accept a private insurer’s policy if its premium is more than 10 percent higher than Citizens’ premium for comparable coverage. As it is now, affected homeowners either have to pay up or forfeit their homeowners insurance altogether.

Residents with a Florida home loan will, therefore, not have the option to forgo property insurance. Their lenders will obtain requisite insurance coverage on their behalf and pass the higher premium costs through to them in the form of higher Florida mortgage payments.

This practice could have greater repercussions than people realize — it may even force many such homeowners to sell their homes and move, probably to another state. The value of vast swaths of Florida real estate, particularly east of Interstate 95, will be dramatically reduced.

Florida insurance rates are already so high, even in “low-risk” areas, that many people who have contemplated moving to Florida from other states have had to rethink their plans. Others are having to decide whether to stay in Florida as it rapidly becomes a citizen-unfriendly state.

Insurance rates and property taxes need to be reasonably predictable. Many of our residents live on fixed incomes. Unless the rates of property taxes are made portable, they often do not have the option of moving to a smaller home, and they cannot absorb huge increases in their insurance premiums.

Add that on to soaring Florida mortgage costs for those with adjustable-rate loans and we are at a critical juncture. Already, the Sunshine State finds itself losing teachers to Georgia, which offers higher salaries and lower living costs. We seem intent on driving longtime residents, such as retirees and recent graduates alike, to do the same.

Maybe the restoration of the Everglades will occur naturally… as many of our current citizens are forced to abandon the state in search of affordable housing elsewhere.

Residents of Florida were fortunate Tropical Storm Ernesto died down before it hit their state. The most obvious reason, of course, being safety for themselves and their loved ones.

Jim Pozo is a Florida mortgage broker, however, and he pointed to another break owners received when everyone’s worst hurricane fears were NOT realized: a storm causing even modest damage would push up his already high insurance premiums.

“I don’t know how people can afford it at these rates,” said Pozo. Another big storm, he said, “is just going to make it go up more.”

Nowhere is the hurricane-relayed insurance situation more severe than in Florida, particularly towns across South Florida housing market and in the Florida Panhandle, where storms in recent years have added billions to the insurers’ losses.

“Even though this was a very mild tropical storm, it reminds the insurance industry of the risk involved in underwriting insurance in Florida and will make them even more cautious,” said J. Antonio Villamil, chairman of Florida Governor Jeb Bush’s council of economic advisers and chief executive of Washington Economics Group, a consulting firm based in Coral Gables, Florida.

Confusion regarding statewide insurance premiums

State officials are stymied on what to do about the problem. They can hope, like Pozo, that the next three months of this hurricane season will be as benign as the first three. The officials have been struggling to halt rising insurance premiums, but they know the more pressure they put on company profits, the more the companies will reduce the amount of coverage they offer.

Insurers such as State Farm and Allstate have already cut back significantly. Consequently, the state-run insurance agency - Citizens Property Insurance - has become the biggest insurer in the state, with about one million policies. Bush and other officials are considering whether to call a special session of the state Legislature to wrestle with insurance issues. Otherwise, demand for Florida home loans could sink even lower.

Insurance prices have been climbing in Florida since Hurricane Andrew in 1992 cost the insurers $21.5 billion in today’s dollars. That storm stood for years as the most costly hurricane … until Hurricane Katrina a year ago led to more than $41 billion in insurance payouts.

Finding coverage at any cost is becoming increasingly difficult. Allstate, for example, has begun turning down renewals for more than 200,000 customers in Florida and turning them over to smaller companies.

Along the beaches and near the water, coverage costs have doubled this year for many homes. They’re now the most expensive in the country, industry officials say. It’s an issue that adds to other housing difficulties across cities in the state. Until something is done about them, people will be hesitant to use a Florida home mortgage on a first house.

Columnist Robert Trigaux of the St. Petersburg Times thinks it’s about time Florida adopted a new state slogan, one appropriate for modern times.

• Perhaps “Like a good neighbor, Florida is there.”
• Or even “You’re in good hands with Florida.”

Sure, these slogans are ripped off from State Farm and Allstate, but given how the homeowners insurance industry has Florida’s elected officials wrapped securely around its collective finger, it’s only appropriate.

All the while, the Florida property insurance market burns and threatens the greater economy. Trigaux asserts that at the end of the day, Florida’s politicians, state-run Citizens Property insurance and all the special task forces are one. Consider some of the insurance news from the past week alone:

– Florida’s four candidates for governor were asked how they would help fix the insurance crisis in the state. All four conceded we’re in a big mess, yet none offered solutions that would help much in the near term. Additionally, none suggested the insurance industry should be held more accountable.

– Since 1996, the property insurance industry has given $11.2 million to Florida candidates and state political parties, with roughly three of every four dollars to Republicans, according to the South Florida Sun-Sentinel.

– On Friday, USAA, the fifth-largest property insurer in Florida, asked state regulators for a rate hike, its second increase in four months. The amount? About 40 percent.

– Among 800 surveyed Floridians asked last week who they hold responsible for the high cost of insurance in Florida, 51 percent point the finger at insurance companies. Only 19 percent named the state government, and just 15 percent blamed the weather.

– Only 14 percent, however, said insurance companies could best resolve the insurance crisis. Floridians still look to the state government for leadership on this nasty predicament. Funny how the industry gets the public blame for the quagmire but avoids responsibility to fix it.

– On Tuesday, a 15-member state panel created by Gov. Jeb Bush and chaired by Lt. Gov. Toni Jennings met for the first time to consider its options in resolving the ongoing crisis. The task force focused not on the utter lack of affordable insurance in the state but on endorsing a matching funds program for owners who spend their own money to help make their houses less prone to hurricane damage. Commendable, yes. Rock solid? Hardly.

– Citizens, the insurance industry’s convenient dumping ground for unwanted policyholders, is the state’s biggest property insurer. In a board meeting, it determined that rather than pay your rapidly rising Citizens’ premiums once a year, soon consumers can pay a portion every 3-6 months! Mission accomplished!

It’s tough to ignore the number, $87,000,000, made in one fiscal quarter by Progress Energy Florida by selling costly electricity to Floridians, even as its North Carolina parent company managed to lose $4 million in the same quarter.

The story went on to say that Progress Energy Florida enjoyed a 770 percent jump in profits in the second quarter of 2006 compared to the same quarter of 2005. Inaccurate? No. But too narrow a snapshot of Florida profits coming at a time when many Floridians are suffering sticker shock from ever-rising energy and insurance prices.

Not shockingly, Progress Energy’s executives did not like this story. It made the company look greedy, as if it were partly to blame for what is already a stagnant Florida housing market.

Big power companies are proud but unusual creatures, ones that consider themselves, and rightfully so, an integral part of their communities. They concede they must endure a Big Bad Utility image when customers lose their power or when monthly power bills start to get confused with the likes of Florida mortgage bills.

They get sensitive, too, when they take heat from rising electricity rates. They argue, in this case, that “higher” rates do not mean more profits but reflect the higher fuel costs they must pay to run their power plants.

They can claim to be misunderstood all they like, and maybe sometimes they are, to a degree. But it’s doubtful, especially at a time when people want more than anything to conserve energy, that many bill-shocked customers will send condolences. Especially as the combined cost of energy, insurance and Florida home mortgage payments continue to mount up with no end in sight.

Some companies many be pulling out of the tumultuous Florida insurance market, but one major real estate force, Coldwell Banker, is coming in.

The company’s officials said they would begin offering an assortment of personal lines of homeowners insurance, working through a partnership with NRT Insurance Agency. Coldwell Banker began offering the insurance coverage August 1.

“With the issues surrounding property insurance in the state, we really feel that strategically this service separates us from the competition,” said Budge Huskey, President and COO of Coldwell Banker Residential Real Estate.

NRT Insurance is licensed in all 50 states, and has been operating as an insurance carrier for five years. It provides insurance through a number of providers including Chubb, American Strategic Insurance, ASI-Lloyds of London, Fireman’s Fund, Liberty Mutual and others.

Initially, the company will offer residential property and homeowners insurance to Florida residents, who have been hit with rising premiums in the wake of record hurricanes in 2004 and 2005. The agency will take on the task of providing affordable policies to the state’s property owners, who are also grappling with rising Florida home loan rates, which have risen more than a percentage point in the past year before leveling off a bit in the past two weeks.

A major focus for Coldwell Banker will also be quality control.

“Our objective in launching the program in Florida is to provide a source of insurance to ensure our customers’ transactions are closed successfully. Buyers with pending transactions will be offered an opportunity for an insurance quote, and the process will be low-key and hassle-free over the telephone,” Huskey said.

South Florida homeowners are banding together in an effort to fight rising property insurance premiums that threaten to drive some from their homes, the Miami Herald reports.

“The insurance companies are going berserk,” said concerned owner Joe Fontana to an audience gathered before him. “There’s no limit to what they will charge homeowners. We have to find a way to counteract this or the people in this city are going to be killed.”

Fontana led the 38-building-strong Miami Beach Condominium and Homeowners Alliance in devising a plan to try to stop the runaway cost of wind coverage. Sunshine State residents such as Fontana are fed up with double- and even triple-digit (!) insurance rate increases, and are beginning to come together to fight the uphill battle.

It’s happening throughout the region.

Residents have had enough and are banding together like never before. Home and condo associations formed decades ago, newly formed grass-roots organizations and accidental groups of jaded residents in individual neighborhoods are popping up around the state to press for solutions to Florida’s escalating insurance crisis.

From the Keys to the Panhandle, groups are raising money, firing off e-mails and letter campaigns, holding meetings, sponsoring petition drives and hiring lobbyists and lawyers to make their case to the state government in Tallahassee. There is strength in numbers, as the saying goes, and many are starting to see a benefit of wielding a collective fist.

At the Mimosa condominiums on Collins Avenue on Thursday night, the Miami Beach Alliance explored the idea of self-insuring. But instead it decided to use its political clout. Noting that it is election season, the group will urge its members, representing about 8,000 home and condo owners, to write and call their elected officials about easing the burden.

STANDING “FIRM”

Other groups have embarked on even more ambitious endeavors.

Born from a backyard get-together in Key West, a consumer activist group known as Fair Insurance Rates in Monroe (FIRM) has raised up to $50,000 in its effort to fight Citizens Property Insurance premiums in the Keys, inspired by one woman’s crusade to have her own rates reduced.

Outraged when her property insurance bill rose from $5,000 to a whopping $12,000, Cindy Derocher pplied for mitigation credits and whittled it to $9,600.

“That’s what started us doing research. We found out that Citizens was charging us $20.91 per $1,000 of principal coverage. That’s in comparison to coastal areas on the Panhandle that were paying $4 per $1,000,” said Teri Johnston, FIRM’s president.

FIRM boasts 4,000 members and was founded just this Februrary. The group chartered an airplane to ferry members to the state’s Capitol to meet with lawmakers and invited state Insurance Commissioner Kevin McCarty and U.S. Rep. Ileana Ros-Lehtinen, a Miami Republican, to the Florida Keys.

SMALL VICTORIES

Its efforts have paid off, at least for the moment. In May, McCarty issued an order to freeze Citizens’ rates in Monroe County. By law, the state’s insurer of last resort must charge the highest rates in the state.

“When we first started this organization, many people said to us that you can’t fight government and you can’t fight big business and you can’t fight the insurance lobby. We have proved that is not true. When you get a group of concerned, educated citizens together, you can,” Johnston said.

Many around the state are taking that message to heart.

The five-month-old Homeowners Against Citizens Florida, a non-profit group out of Pasco County, has seen its ranks swell to 7,000 members statewide. The group says it has collected twice as many signatures on a petition calling for a special legislative session to address the crisis.

Similarly, the year-old, two-million-strong Coalition of Community Association of Florida, an umbrella group of homeowners associations, is drafting insurance legislation that it says would make it harder for insurers to randomly drop policies and plans.

Together with the rising costs of Florida home loans and overall energy prices, the increase in premiums for current and prospective residents is taking a toll on the once torrid housing market. The fallout is so wide-ranging that widespread action became necessary. Motivating homeowners always hasn’t been easy… but it’s been worth it.

“Americans are not very easy to rally together. They would rather watch American Idol than look after their insurance premiums, but it’s an emergency and people are coming out,” said Jan Bergemann, President of Cyber Citizens for Justice.

The Florida housing market continued its decline with lagging sales in the month of June. In short, our state’s housing market is in a down swing because the following are on the way up:

• Energy costs
• Inventory levels
• Florida home loan rates
• Property insurance premiums

All of the above continue to take their toll on the housing sector. The Tampa Bay Business Journal reports that homes sales dropped 34 percent in Tampa last month, falling to 3,442 from last year’s 5,230. In Sarasota/Bradenton, sales fell 40 percent to 762, down from 1,276 last year.

But, as we have seen across the state, slowing sales don’t translate to cheaper Tampa real estate. The average price of the homes sold in the Tampa area was still up 15 percent — at $239,600 — from the $208,700 posted last year at this time. The median price in Sarasota/Bradenton dropped 3 percent to $326,800.

Statewide, the existing-home median price rose 3 percent to $257,800 last month. A year ago, it was $249,800. A total of 18,089 existing single-family homes sold in Florida last month, a decrease of 29 percent from the 25,552 homes sold in June 2005.

In June 2001, the statewide median sales price was $132,500, representing an increase of about 94.5 percent over the five-year period. Nationally, the median price for existing single-family homes was $229,700 in May, up 6.4 percent from a year earlier.

Home sales are projected to ease modestly, but stay within a relatively narrow range over the remainder of the year, industry analysts. Despite the rise in Florida home loan borrowing costs and prices that are causing sticker shock, the National Association of Realtors expects 2006 to still be the third strongest sales year on record. Most analysts agree that while the market is in decline, a return to normal was inevitable.

Looking to Florida’s existing condo market, sales of existing units also decreased in June, with a total of 5,241 condos changing hands statewide compared to 8,109 in June 2005, marking a 35 percent decrease. The median sales price for condos remained relatively flat last month at $212,500. A year ago, it was $215,700. The national median condo price in May 2006, meanwhile, was $229,300.

A big reason for the decline is the steady rise of Florida home loans. Last week’s survey from Freddie Mac showed the average rate for a 30-year fixed-rate mortgage was 6.80, and for June as a whole, the figure was 6.68, up from 5.58 percent in June 2005. It remains to be seen whether sellers will lower lofty asking prices and jump start the market again, or whether the current flat-lining is just getting started.

If you live in Florida, you know what a growing concern insurance has become. With the recent storms, financial crises and widespread industry chaos, individuals need to do whatever they can to protect their money and their homes. So what is one to do?

You can actually save on homeowners insurance in a number of ways, ranging from the type of building material used in your home to how close you live to a fire station. The potential ways for you to save may vary by company and location, but many are probably available to you — and at surprisingly little effort. Here are 12 ways you can save money on property insurance:

1. Shop around.

Check with many different insurance companies to get rate quotes. This is about as basic a money-saving tip as there is, but a lot of people simply don’t take advantage of what’s out there. You’d shop around for the best Florida home loan rates, right?

This is the same deal. Are your friends and family happy with their company? What kind of rates are they getting? Check the Internet for online quotes, too. You might be pleasantly surprised.

2. Bump up your deductible.

The deductible is the amount of money you have to contribute toward a loss before your Florida property insurance kicks in. Typically, a deductible will start around $250. What many people don’t know is that by upping the amount of your deductible, you can initiate a reduction in premiums right off the bat. If you increase your deductible to:

• $500… you can save up to 12 percent
• $1,000… you can save up to 24 percent
• $2,500… you can save up to 30 percent
• $5,000… you can save up to 37 percent

Of course, it’s important to make sure you can afford to pay the higher deductible out of pocket if something does happen. Which it might.

3. Get your home and auto insurance policies from the same place.

It’s pretty common in the industry for many companies to give a discount if you buy both homeowners and auto coverage from them.

4. Quit smoking.

What? Believe it or not, smoking accidents account for more than 23,000 residential fires every year. Some insurers actually offer to reduce your premiums if no one in the home smokes. So stop!

5. Consider insurance when buying a home.

You have to get it. We’re not talking about that. We mean considering how the home is structured and how that is likely to play into future claims. If you’re a first-time buyer in particular, think about how much insuring the home is going to cost. A newer home’s electrical, heating and plumbing systems and overall structure are likely to be in better condition than those of an older home, which can lead to a discount. You’ll also want to consider construction of the home and where you live. Especially if you live on coast, you’ll obviously want the house to be able to stand up to wind damage and heavy rains.

6. Improve security and safety.

Items such as alarms and smoke detectors usually can bring discounts of 5 percent each, depending on the company. Your property insurance company may also offer a significant discount of 15-20 percent if you install a state-of-the-art home-security system. Check with your insurance rep to see which systems they recommend and which will earn you a discount.

7. Insure your home, not the land.

While your home and its contents are at risk from fire, theft, windstorms and other perils, the land your home sits on is not. Do not include the value of the land in deciding how much insurance you need to buy.

8. Stay with one firm.

If you keep your homeowners insurance coverage with a company for several years, you may receive special consideration. Several insurers will reduce their premiums by 5 percent after staying with them for 3-5 years, while some companies will discount you as much as 10 percent after six years. It’s worth it to establish loyalty.

9. Senior discount potential.

Insurance companies have found that retirees stay home more and spot fires sooner than working people. Older folks also have more time for maintaining their homes. If you’re at least 55, you might qualify for a discount of as much as 10 percent. You won’t know if you don’t ask.

10. Group coverage.

Alumni and business associations often work out insurance deals with an insurance company, which includes a discount for association members.

11. Look for private insurance first.

If you live in a high-risk area and think you’ll be forced to buy coverage from your state’s high-risk insurance pool — in Florida, this has led to higher premiums due to the never-ending deluge of storms and the ensuing Citizens quagmire. Check first with an agent to see if you can avoid it. You may find that you can still buy insurance at a lower price in the private insurance market than from the insurer of last resort.

12. Check your policy. Annually.

You want your policy to reflect the value of your home and belongings, so by reviewing your policy every year, you’ll be able to make adjustments. If you just sold a valuable painting, for instance, you won’t need the same amount of coverage. But if you built a garage, on the other hand, you might need to increase your coverage. Combined with higher Florida home loan payments and energy costs, insurance is a major burden on homeowners. Do what you can to reduce it!

Florida homeowners and businesses staring down higher property insurance premiums have a new, powerful ally calling for relief, the Orlando Sentinel reported Tuesday.

The National Association of Realtors recently urged a Congressional subcommittee to craft a comprehensive disaster insurance policy. Some mechanism is needed to spread and minimize risk nationwide, the Realtors contend, such as national disaster insurance, so individual states and regions are not overwhelmed by catastrophic events such as earthquakes and hurricanes.

The powerful group representing 1.3 million members nationwide said when buyers and sellers cannot find insurance at reasonable rates, it can slow sales and jeopardize the economy. The association contends that the Florida housing market slowdown is, in part, the result of a lack of affordable or available homeowners insurance.

“We need to get something done. We’re pushing, not just for Florida, but for the whole country,” said Tom Stevens, President of the National Association of Realtors.

The downturn in home sales since last year can’t be fully explained by rising Florida mortgage rates, rising inventory and a normal cycle of housing patterns, according to a study by the Realtors. Because natural disasters from earthquakes to tornadoes can happen anywhere and overwhelm insurance markets, the key is a national policy so companies can’t walk away.

The Florida insurance industry has not endorsed a national catastrophe plan.

“Until we see specifics, it’s just not feasible to say anything,” said Gary Landry, spokesman for the Florida Insurance Council. “But people have to ask whether we need another government program. We’ve been saying for some time that we don’t have an insurance crisis in Florida. What we have is a hurricane crisis, and as long as hurricanes continue to be a threat, rates are not going to go down.”

A bipartisan bill introduced by senators from three storm-battered states — co-authored by Bill Nelson (D-Fla.), Thad Cochran (R-Miss.), and Mary Landrieu (D-La.) — calls for an investigation into ways to strengthen the insurance market. If passed, the bill would create a panel of experts to craft recommendations.

Echoing the calls for industry reform, the National Association of Insurance Commissioners recently adopted a resolution urging the creation of such a commission.

While there are many reasons for the affordable housing crisis in Florida, one of them can be linked to the constant threat of natural disasters in the area. Hurricanes take a financial - and personal - toll.

As a result, the cost of homeownership can easily spiral out of reach for the average consumer during times of catastrophe if homeowner insurance isn’t made affordable, the National Association of Realtors said in written testimony to the House Subcommittee on Housing and Community Opportunity.

“Options for obtaining and maintaining coverage for natural disasters are dwindling,” said Thomas M. Stevens of Vienna, Va., president of NAR. “America’s hard-working families deserve a comprehensive federal natural disaster policy that makes natural disaster insurance available and affordable and reduces the circumstances under which insurance companies cancel these insurance policies.”

Recent research conducted by NAR in the state concluded that the lack of affordable or available homeowners’ insurance contributed to a slowdown in Florida housing markets, which can contribute to a slowdown in overall economic activity in the region. Florida home loan demand drives other factors.

“When buyers and sellers in high-risk states cannot obtain or retain homeowners insurance, which is necessary for a mortgage, it can slow home sales in those areas,” said Stevens. “A strong housing market is the foundation of a healthy economy, and as a nation, we must safeguard the vitality of the residential and commercial real estate markets.”

With Florida home loan rates consistently on the rise, potential owners need insurance to at least fall in their favor. Buyers will remain outside the market until factors allow them to make reasonable offers.