Latest blow on Citizens Property Insurance Florida windstorm coverage: Short-term rentals

Possible damage to the vacation-rental and construction industries was front and center during a meeting of Middle Keys real estate agents in Marathon Monday.

Roughly 50 real estate professionals and government officials turned out for a meeting with local nonprofit Fair Insurance Rates in Monroe and representatives from the state-backed Citizens Property Insurance Corp. to try to reverse Citizens’ latest actions: Disallowing builders’ windstorm risk insurance and not allowing homes that are licensed to rent for seven days or less to get Citizens windstorm coverage.

Citizens is under instruction from the administration of Gov. Rick Scott to eliminate some 678,000 policies from its books to reduce the state’s risk.

The insurer of last resort holds about 1.5 million policies statewide, including 25,807 on 27,951 Keys properties, according to FIRM.

Elements of Citizens’ plan are already directly affecting the Keys, and that’s not even including onerous rises in premiums for homeowners.

Citizens Director of Legislative and External Affairs Christine Ashburn admitted there is no “seven days or less” rental provision in the company’s underwriting manuals.

FIRM Executive Director Annalise Mannix said the requirement came from the Florida Hurricane Catastrophe Fund, from which Citizens buys re-insurance to protect itself in the event of a large storm.

“The Legislature said that the Cat Fund is only for residential policies [and] the Cat Fund governing board said transient use of a residence means it’s really commercial.”

Mannix said Cat Fund Executive Director Jack Nicholson invoked the rule of seven days or less about six months ago.

“Where he picked the seven days from, we have no idea. These are just people trying to get help in paying for their homes. They’re here six months of the year. But the Cat Fund didn’t budge,” she said. “Of all the things, this has got to be one of the worst. This is going to really affect us.”

Daniel Samess, Greater Marathon Chamber of Commerce chief executive officer, outlined the number of rentals in each of the five county Tourist Development Council districts.

He said vacation rentals in 2011 in the Middle Keys alone were worth $97.7 million to the local economy, and more than $160 million for the entire Keys. The Middle Keys are by far the largest vacation rental district in the Keys, with more than 1,100 units.

According to the state Department of Business and Professional Regulation, the Keys as a whole have 2,771 registered vacational rentals. In 2010, they accounted for 75,200 room nights, the agency says.

Samess pointed out a “domino effect” if that many vacation rentals came off line, leading to fewer tourists, less tax income and local revenue, fewer local jobs and ultimately declining property values.

Marathon allows rentals of seven days or more; other areas of the Keys do not, going for 28 days or more.

Florida Keys Contractors Association President Chris Gratton spoke on builders’ risk policies on new construction. He and numerous audience members said eliminating such policies would be detrimental to new construction.

“We feel we have to take control of this,” Gratton said. “We already build to the highest wind load in the state of Florida; we have the strictest building code. Wind damage is almost non-existent down here when it comes to storms.”

Ashburn said Citizens stopped writing builders’ risk policies because it wasn’t required by law to do so. But Citizens Executive Director Tom Grady offered possible relief in a May 15 letter to FIRM board member and Monroe County Commissioner Heather Carruthers.

“If it is simply not available at any cost through any voluntary, admitted surplus or other market, then that is an issue that would be appropriate to revisit,” he said.

Mannix and FIRM board members are scheduled to travel to Jacksonville on June 6 to meet with Citizens’ staff and board of governor.

View the original article here: http://www.keysnet.com/2012/05/23/449057/latest-blow-on-windstorm-coverage.html