Sinkhole Insurance in Florida: The Saga

A new law regarding sinkhole insurance became effective this past January, just in time for one of the worst sinkhole seasons Florida has seen in years. This law will especially impact residents of two particular counties, Pasco and Hernando, because private insurers are no longer required to automatically include sinkhole coverage in homeowner policies. Instead, the policies may protect for more limited circumstances, like those of catastrophic ground cover collapse damage. Sinkhole insurance policies now come with hefty additional fees.

Who is responsible for the repairs caused by sinkholes, which are naturally occurring land-surface depressions typically found in limestone-rich areas? What role do the homeowner's insurance companies operating in Florida and the Florida government have in aiding those impacted by sinkholes? These and other questions may help resolve the debate among many Floridians about whether to drop, add or renew comprehensive sinkhole insurance.

Can insurance companies require me to purchase sinkhole insurance?

Some private insurance companies may insist that you purchase sinkhole insurance. Even though it increases the cost of a policy, it does also raise the risk factor for the insurance carrier. Because of the increased risk, many insurers who operate in Florida do not mandate sinkhole insurance nor do they cover sinkhole damage.

Will insurance companies cancel my existing sinkhole insurance?

Insurance companies may cancel a sinkhole policy at any time. For residents of Pasco and Hernando counties, automatic drop notices have already been given because of the new law and a jump in sinkhole claims and costly payouts.

If my sinkhole coverage is dropped by a private insurer, what is the next best option?

There is a government insurance option if a private carrier drops your sinkhole coverage. Most people in Pasco and Hernando counties are either already insured under Citizens Property Insurance Corp. (Citizens), Florida's state-run homeowner insurance company, or they will be within the next decade. For other counties in Florida, homeowners may select sinkhole coverage with Citizens or a private insurer as needed and available.

Do I have to use insurance payout money to fix my home?

If you receive insurance money for a sinkhole claim, Florida now requires you to use this money to fix the damage your home suffered as a result. This rule arose from an unfortunate practice where some homeowners who suffered sinkhole damage and were paid by the insurance companies never fixed their sinkhole problems. Instead, they sold their properties for 50 or 60 cents on the dollar, causing the whole community to suffer.

Is it possible that sinkhole coverage will get more expensive?

The price of sinkhole coverage in Florida is on the rise whether you choose to pay for it through Citizens or a private carrier. Homeowners can decrease sinkhole insurance costs, however, by increasing the deductibles for personal items and windstorm damage. It is also a good idea to ask for a windstorm mitigation discount, which can reduce premiums, on average, between 12 to 13 percent.

Additionally, you can employ an appraiser to review your home's structural integrity and reassess its value. If the result of the appraisal is below the insurer's home replacement estimate, the insurance company can make an adjustment and save you money.

How can I lower my premium?

Currently, Citizens gives homeowners the choice to select comprehensive sinkhole coverage or just catastrophic ground cover collapse insurance. The difference between the two is important. Although catastrophic ground cover collapse coverage may reduce premiums up to 50 percent, it only applies when a house is condemned following major sinkhole damage. Minor foundation and drywall cracks, for example, are not covered under this provision, but would be covered under the full sinkhole coverage policy.

There are some private insurance companies that do not offer the catastrophic option, so shopping around is a must. Citizens used to be seen as a last resort, but not anymore. If other carriers cannot compare to Citizens' policies and prices, it is always an option.

What should I do if I need help recovering insurance payouts for sinkhole repairs?

Sinkholes are not unique to Florida, but more sinkholes develop in Florida than any other state. When sinkholes develop under roads, houses or public utility structures, repairing this destruction can be expensive and time-consuming. It is important to revisit your homeowner's policy and consider dropping, adding or renewing sinkhole coverage on a regular basis. It is your right to question and challenge your agent and insurance company in order to help you prepare for the worst and to protect your home.

However, if you do have questions about your sinkhole insurance policy or you are having a hard time receiving insurance payouts for repairs because your claim was denied, contact an experienced sinkhole attorney in your area. A lawyer may be able to help you prove sinkhole damage, guide you through the appeals process and fight for the money you deserve to repair your home.