Following years of getting slammed by hurricanes in the Sunshine State, condo owners are starting to consider self-insurance trusts to provide an alternative to the nearly-impossible rates charged by traditional insurance providers.

The Palm Beach Post reports that trust funds for providing insurance coverage for windstorms may help cut premiums in half by establishing a means of self-insurance for condo associations. Palm Beach Windstorm Self-Insurance Trust is such a group and they've already signed up about a half dozen buildings to the trust fund, hoping to add nearly 60 more to the group by the end of the year.

Richard Duer, a consultant to the fund, helped garner legislative support for the self-insurance concept in last year's Florida assembly. It passed, and he says only quality high-rise buildings constructed of concrete and steel are allowed to join the pool.

The trend toward self-insurance pools is growing as condominium associations statewide have faced doubling and tripling rate increases over the last three years. At Mayfair House condominiums on Ocean Boulevard, insurance premiums more than doubled from about $150,000 in 2006 to $320,000 in 2007, which forced the condo association to increase dues by nearly 50 percent to $650 per condo per month, that according to Sun-Sentinel.com.

Bob Hunter, the insurance director for the Consumer Federation of America, says that a rate freeze in the state disappears next year, according to the Sun-Sentinel, fueling the urgency for condo associations to find affordable alternatives.

Published: March 13, 2008

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Mr. Carr has covered real estate since 1989. He is the author of Real Estate Investing Made Simple. Got a personal real estate issue? Post your questions and comments at Anthony’s blog: commonsenserealestate.blogspot.com.