NEW PORT RICHEY - Grace Kessel stopped insuring her 1969 single-story ranch home after she got a premium quote of $8,900.

"They are robbing us," the 70-year-old said. "I won't pay it."

Kessel is among a small number of homeowners who have dropped coverage of their homes, which the industry calls self-insuring or going bare. No one knows how many Floridians have dropped homeowners insurance, but industry experts and agents think the number is growing.

It's an expensive gamble in which homeowners can save thousands on premiums in exchange for taking the financial risk if a hurricane damages or destroys their home. Homeowners such as Kessel are also on the hook if their home is damaged by fire, burglarized or if someone is injured on the property.

Homeowners can savor their tidy windfall if trouble stays away, but the situation can turn dire if they don't have the money to rebuild.

Florida lawmakers just concluded a special session called to lower property insurance rates, but the legislation Gov. Charlie Crist signed into law Thursday is expected to lower rates only an average of 22 percent, far less for customers of the state's two largest insurers, State Farm and Citizens Property Insurance Corp.

Homeowners who spoke with the Tribune about dropping their coverage said the reductions aren't deep enough to spur them to buy insurance again.

"To me, it's just a big racket," said Robert Kubacki, who dropped his Citizens policy for his home in Holiday, a mile from the Gulf of Mexico.

One change Florida lawmakers approved in the special session allows homeowners to buy insurance that excludes windstorm coverage, protecting only against fire and theft. The decision can dramatically lower rates, but it requires homeowners to pay to rebuild after a hurricane.

That's an option Kessel might consider, if the price is low enough.

Hurricanes Spawn 'Rebels'

The idea of dropping homeowners insurance became more attractive after eight hurricanes ravaged the state in 2004 and 2005. The storms caused $36 billion in insured losses and an upheaval in the state's property insurance system. The aftershocks can be felt today in soaring property insurance rates, higher deductibles and fewer insurers writing policies in the state.

Businesses and government entities have long decided not to insure all their property, but it's a relatively new phenomenon among homeowners. The National Association of Insurance Commissioners has become interested in tracking the trend.

Dropping coverage may seem like a great way to save money, but few have the financial resources to do it.

Going without insurance is usually not an option for anyone who owes money on a home. Mortgage companies generally require insurance as a condition of the loan.

Kessel and her late husband, Anthony, paid off their mortgage in 1991.

Nationwide Insurance had insured the home for $2,300 a year until the company dropped the policy in November.

Citizens, the state-created insurer for those who can't get coverage in the private market, emerged as the only company that would insure the home. Its quote: $8,900 a year.

Kessel decided to go without.

"I find it amazing that people wouldn't insure their largest asset, but it happens," said Rebecca Launchi, an insurance agent with 4th Street Insurance Professionals in St. Petersburg. "Before 2004, you never heard about it, but now you have a handful of rebels doing it."

Launchi said she usually gets the first call after a customer gets a new quote showing a dramatic premium increase. The customers usually are exasperated, demanding a lower rate or else they will drop the policy.

"I'm being threatened with it," she said.

Going without insurance is especially attractive for snowbirds such as Kubacki, whose parents bought the home for $8,500 in 1967. The Wisconsin native lives in the home a few months each year, and he wouldn't have to worry about finding a place to live if a hurricane damaged the home.

Kubacki has a joke that he loves to tell friends and neighbors.

"I've got two signs in my garage," the retired carpenter says. "The first one says, 'House for sale.' The other says, 'Lot for sale.'"

Know What You Can Afford

Owners of expensive homes were among the first to drop coverage, figuring the chances are rare that a storm would do enough damage to exceed deductibles that easily top $50,000.

"It gets to a point where it makes good economic sense to drop it," said Bob Hunter, a former Texas insurance commissioner now with Consumer Federation of America. "But you do have to know the consequences."

Homeowners debating whether to drop coverage should make sure their home has a strong roof, windows and preferably storm shutters to protect it from high wind, Hunter and other experts said. They said nobody should consider going without insurance unless they have the money set aside to make repairs or can afford another loan. Homeowners also should know the cost to rebuild.

"You have to know what you can afford," Hunter said.

So far, the decision by Robert Hillary and Jan Bauer to drop the property insurance on their home has paid off.

They live on Bellaire Beach in a single-story house about a block from the Gulf. They haven't had insurance since the house was paid off six years ago.

"We don't want it," said Hillary, 42. "It's a waste of money."

Hillary said he can repair any damage hurricane winds might do and doesn't worry about storm surge washing away the home. He said they already dole out enough money for property taxes and utilities.

"For us, it was an easy choice," Hillary said.

The high cost of insurance has people thinking about dropping coverage who never would have imagined it a few years ago. They consider it even as scientists predict more and bigger storms in the next few years.

Often the decision to drop coverage is made out of necessity for those who live in mobile homes.

Private insurers generally stopped writing insurance for mobile homes after the storms of 2004 and 2005.

Insurers paid about $2.3 billion in hurricane claims for mobile homes in those years, according to the Florida Office of Insurance Regulation. Companies settled 215,696 mobile home claims, including 5,502 total losses.

Most of the state's 900,000 mobile home owners can find coverage only with Citizens, which traditionally has charged the highest rates so it doesn't compete in the private market.

Pinning Their Hopes On FEMA

The high cost has forced many owners of mobile homes, the state's most vulnerable housing stock, to drop their coverage. A few mobile home owners said they don't have money to rebuild after a storm, and would rely on help from the Federal Emergency Management Agency.

The problem is so severe that the Florida Manufactured Housing Association wants to start its own property insurance company.

The group hopes to raise $14 million and have the new insurance company operating by June 1, the start of the 2007 hurricane season.

The association initially wants to insure mobile homes built after tough strength standards were implemented in 1994, which accounts for about 200,000 homes in the state.

The group came up with the insurance company idea when soaring property insurance rates began to hurt mobile home sales.

"This is out of necessity, not desire," said Jim Ayotte, the group's executive director.

Don Salata lives in a mobile home a few blocks from the Gulf.

He borrowed money from a friend to pay off the mortgage so he could drop the property insurance, which cost several hundred dollars a year.

"I'd be bankrupt if I had to pay insurance," said Salata, 52, who works part time building theater sets in Tampa.

Like others who go without insurance, Salata admits he couldn't afford to rebuild after a hurricane.

"I'd hope FEMA would help me out," he said.

Reporter Baird Helgeson can be reached at bhelgeson@tampatrib.com or (813) 259-7668.