Florida homeowners are going without sinkhole coverage

Up until a few years ago, all policies of homeowners insurance issued in Florida automatically included coverage for sinkhole damage. In 2007, the Florida legislature amended the Laws of Florida to allow insurance companies to strip this coverage from their policies and, instead, only include limited coverage for catastrophic ground collapse. The catastrophic ground collapse coverage–which is now the only sort of ground subsidence coverage automatically included in your policy of insurance–would only cover the type of horrific loss which took the life of a Seffner man in February.

If homeowners want the full sinkhole coverage that they used to have automatically included in their policies, the homeowners must now buy this sinkhole coverage as an additional rider to their policy. Unfortunately, due to the skyrocketing of premiums for sinkhole coverage, many Floridians are finding themselves with no choice but to drop this crucial coverage.

According to the Tampa Bay Times, five years ago 76 percent of Citizens Property Insurance customers had full sinkhole coverage and by 2012 that number was down to 58 percent. Citizens Property Insurance is Florida’s government-run insurer.

Earlier this month it was reported by the Tampa Bay Times that at least 1,500 homeowners who recently dropped their sinkhole coverage with Citizens got quite a break. Hundreds and sometimes even thousands of dollars were shaved off of the premiums of homeowners who dropped the important coverage due to what the insurer has since called a glitch; some customer’s rates dropped to lower than $200 a year. It is not clear whether Citizens will revise such rates when the customers renew their policies next year.

Even absent Citizens’ rock-bottom and accidentally low rates, many homeowners in Florida do save hundreds of dollars by going without full sinkhole coverage. However, especially in certain parts of our state, sinkhole coverage can be necessary.

The Tampa Bay area, for example, is prone to sinkhole activity, which is most often caused by the underground collapse of limestone formations. Sinkhole damage that an insurer might not consider to be “catastrophic” can still cause significant damage. Sinkhole activity often causes cracks in foundation, flooring and walls, and of course for most Florida residents their home is their most important asset, so sinkhole damage to a property can cause serious financial trouble.

Of course, even those who are sufficiently insured can have trouble getting an insurer to honor a claim as we discussed last week in this sinkhole blog. Those who have questions regarding sinkhole insurance coverage, sinkhole damage or sinkhole claims may benefit from talking with a sinkhole attorney about their rights and options.

Source: Tampa Bay Times, “Citizens’ sinkhole ‘glitch’ grows; premiums plunge if coverage dropped,” Susan Taylor Martin, May 5, 2013