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Date of Issue: December 20, 2007

Insurance: Zoning decision could cost Perico Bay Club $300,000

Terrence Hobbs is one of 694 owners at the Perico Bay Club condominiums facing a significant increase in insurance premiums due to the community's location on an island west of the mainland. Islander Photo: Molly McCartney

Here’s a Christmas letter to the nearly 700 members of the Perico Bay Club condominium complex Island on the south side of Manatee Avenue.

Welcome to insurance Zone 2, where property owners apparently will be joining those living on Anna Maria Island and paying higher property insurance rates - especially for wind coverage - because of location.

We know you want to be in Zone 3 along with the rest of Manatee County’s mainland communities. But as of Friday, Dec. 14, state insurance officials were saying that they actually belong in the more expensive Zone 2.

If that decision stands, the annual premium cost to insure the Perico Bay Club buildings will be about $432 more per condo unit, according to John Hagerty, Perico Bay Club manager, and Terrence Hobbs, a Perico Bay Club condo owner and board member.

“That’s a pretty significant increase, and it’s going to cause some budget constraints - no getting around that,” said Hobbs, a retired U.S. Air Force colonel. “But if you want to stay here, you’re going to have to pay it, and we probably will, at least during this time when you can’t sell anything anyway.”

Hobbs has been working with Hagerty on this insurance issue, hoping to avoid the increase by challenging what they see as a zone change.

They said the zone issue came up this summer when the Perico Bay Club lost its standard insurance coverage and turned to Citizens Property Insurance Corporation, the state’s insurer of last resort.

Citizens processed the Perico Bay Club application with its new software and concluded that the condominium complex belonged in Zone 2 rather than Zone 3.

Hagerty figures the additional premium for a Zone 2 designation is about $300,000 a year for the Perico Bay Club complex, a gated community with a huge American flag at its entrance and grounds that include winding streets, lush landscaping and waterways and bays that attract birds and other wildlife.

The extra premium works out to about $432 a year for each of the club’s 694 condo owners.

As part of their zone challenge, Hagerty and Hobbs met with representatives of Citizens in November at the Bradenton holiday open house hosted by state Rep. Bill Galvano (R-68), who has been working to find solutions to the state’s insurance crisis.

Hagerty works for Sentry Management, a professional management company that oversees the Perico Bay Club operations. Hobbs is a member of the Edgewater Cove I board, one of several condo boards within the Perico Bay Club complex.

In the meeting at Galvano’s office, Citizens communications director Christine Turner told Hagerty, Hobbs and Galvano she would try to get to the bottom of the Perico zone issue.

After consulting with Citizens’ underwriting team, Turner sent an e-mail message to Hagerty last week saying that Citizens has new software technology that enables its underwriters to electronically check the information submitted on the agent’s application form for a condominium community.

“The agent has classed this (Perico Bay Club) risk as a Zone 3,” the Turner e-mail said. But in reviewing the agent’s application, Citizens found that Perico Island and the Perico Bay Club actually are located in Zone 2, because “the property address is located on an island west of the mainland.”

Explained Turner: “It is my understanding that this risk should have always been considered Zone 2 in the past and it was not because we were not capable of checking it electronically until now.”

This is the first year that Citizens has been able to electronically confirm addresses and zone designations for condominium properties, Turner said.

But it has been possible for Citizens to do electronic checks on single-family home addresses and zone designations “for some time,” she said, and, as a result, “single-family homes on Perico Island have always been considered Zone 2.”

Turner’s e-mail to Hagerty also included a discussion of the agent’s reasons for classifying Perico Bay Club as a Zone 3 property rather than Zone 2.

Without identifying the agent, the message said that the agent had expressed the opinion that Perico Island had been part of Zone 3 in the past and that the Zone 3 definition appeared to have somehow changed because “the state or county had done some dredging” that disconnected the island from the mainland by water.

It was not clear from the e-mail if the agent had addressed how the condo complex could have a different zone designation from single-family home.

Nor was it clear at press time if this is the final word on the Perico Bay Club zone designation.

Galvano said he would like to see more research, because “you have a whole community relying on one representation and making plans based on that, and then the premium makes a huge jump.”

He said he would do some homework to review what the Perico Bay Club owners are saying and to discuss matters with the Florida Office of Insurance Regulation, which regulates insurance rates in Florida.

“If the agent is correct about a change as a result of some dredging, then maybe there is something to explore,” Galvano said, so he thinks “we need to take another look and make sure it is as equitable as it can be.

“I feel for everybody so much.”