Pasco and Hernando Counties have experienced dramatic problems with sinkholes. Geologists say this area of the state is particularly prone to the problem. A sinkhole can strike anywhere, anytime, and take your home right out from under you.
While FCAN does not agree with the conclusions of the study, the Florida Senate issued a sinkhole study. The study essentially concluded that sinkhole claims are swamping insurance companies and that many of the claims are insubstantial i.e. for cracks in the driveway. Legislators seem to believe that a combination of greedy attorneys, greedy public adjusters, and dishonest homeowners (possibly under financial pressure because of the recession) are at fault.
The solution being proposed is S. 408 - the major insurance bill in the Senate Insurance Committee - is essentially eliminating sinkhole insurance coverage. The bill accomplishes that by narrowly defining a sinkhole (your house would have to fall into the hole) and giving insurance companies the option of not issuing the coverage. Of course, no insurers are going to offer the coverage and this brings up a number of problems:
- Homeowners have mortages and are required to have sinkhole coverage. What will the banks do?
- Will Citizens offer sinkhole coverage?
- Do legislators intend everyone to get insurance from Citizens?
- How will legislators handle the wave of foreclosures if homeowners can't obtain insurance?
It's really a mess and there are no easy answers. Unfortunately, sinkholes DO occur and people need insurance. That's our bottom line. The Legislature's solution of simply outlawing sinkholes won't work.
What the Legislature has done with sinkholes is called a "carve out." It means that, like mold, floods, and hurricanes, your policy simply won't cover sinkholes, with exceptions. Insurers say these are non-insurable losses because they can't charge a premium high enough to pay claims. But it could mean that they're not trying hard enough to fight fraud, or that there is a cause for sinkholes that wasn't there when many homes were built.
No matter the cause, the result is that homes aren't covered so if the worst happens, the homeowners, their neighbors, and the government have to deal with the mess. That's not a solution.
FCAN advocates "all perils" policies that would cover, as the name implies, anything and everything that happens to your house. This would spread the risk more equitably and give us understandable and transparent pricing. Maybe someday...
Senator Mike Fasano fought hard for consumers, but there are few other supporters.
Call your legislators and ask them for real sinkhole insurance protection. Don't let the insurance companies write the rules.