"I live in a small, rinky-dink apartment building," says one woman of her 21-unit Chelsea condominium. "There's no way it would be a target." Maybe not, but her insurance company isn't taking chances. After September 11, her building's premium shot up 168 percent over last year's. The condo was able to absorb the cost, but if the rate rises next year, "it may necessitate an increase in our common charges," says the board's president.
He's not alone. All over Manhattan, insurance costs are skyrocketing. At the Majestic, with its Central Park view and history of celebrity residents (Lucky Luciano, Ian Schrager), the bill went up 29 percent, and the managing agent considers that fortunate. "We were lucky to do it back in October, when the rates weren't as high," says Burton Wallack, whose firm runs the building. "We were also negotiating for 45 properties, which gave us leverage."
Most buildings should expect increases of at least 40 percent, says Stuart Oberman, president of the Oberman Companies, which insures many residential buildings. New York State requires primary carriers to provide terrorism insurance, but "they will get their pound of flesh" with higher prices, says Oberman. That is, if they'll write a policy at all: "A gorgeous, well-run building on the Upper East Side may not get coverage because a company is overexposed in that Zip Code," adds Oberman. "It's becoming absurd."
Several new projects have been postponed or canceled, like a 30-story tower whose developer couldn't get the coverage his bank demanded. The issue isn't affecting just residences, either; at the Condé Nast building, the owners (the Durst family) are battling in court with their mortgage holder over a demand for a one-year terrorism policy. Yankee Stadium's rates rose 125 percent, too.
Relief may come from Congress, if it passes a proposed law that will cover most insurance-company losses over $10 billion. In the meantime, buildings like the Chelsea condo don't have many options. "We got a letter from the insurance broker telling us to expect an increase of 300 to 400 percent," says the condo president. "I guess we were lucky that it was only 168 percent."