Homeowners struggle to navigate sinkhole insurance policies

While sinkholes seem to be an issue throughout the country, some areas, such as those in the state of Florida are particularly prone to the natural disasters. While at one point individuals in the state, who suffered property damage to their homes as a result of sinkholes, would be able to recover money to pay for those damages via an insurance claim, the changes made to state insurance laws in 2011 have made it much harder to accomplish this. This leaves many insurance policy holders unsure of how to proceed.

Among other things the changes:

  • Made sinkhole insurance separate from a base home owner’s policy.
  • Makes it easier for insurers to deny sinkhole coverage.
  • Limit coverage to houses.
  • Allow insurers to select the engineers used to determine whether the houses meet the standard.

The changes were the result of the great losses incurred by insurance companies as compared to the premiums collected. While many may agree that the system was in need of some reformation, the changes have placed homeowners at a serious disadvantage. In addition to the issues listed above, some homeowners are finding sinkhole insurance policies too expensive to purchase. Without the means to repair sinkhole damage, others are finding that the value of their homes plunged dramatically. Some also live with questions regarding how safe their homes actually are to reside in.

The Florida Insurance Commissioner recognizes the view point of critics of the change. He said that following the changes it is possible that “the pendulum has swung too far the other way.” To that end, he indicated he was going to initiate a plant to examine how often claims are being denied and the affordability of sinkhole insurance.

The area of sinkhole insurance is harder than ever to navigate. It makes sense then that homeowners who encounter issues with sinkhole insurance policies and are able to, work with a lawyer to determine the best way to proceed

Source: Tampa Bay Times, “Florida’s ‘sinkhole alley’ homeowners struggle with insurance overhaul,” Jeff Harrington and Dan DeWitt, Oct. 10, 2014