Sinkhole claims in Pasco County, FL., went from a few hundred thousand dollars in 2001 to $45 million in 2005.

What happened was that in 2005, many homes had sinkhole claims. The insurance companies paid out but the homeowner’s never repaired the sinkholes. Instead, the homes were sold for 50 or 60 cents on the dollar.

Sinkhole Coverage

Citizen’s Insurance, seen as Florida’s last resort insurer, was created in 2002 to provide property coverage to homeowner’s who have no other place to go for insurance.

They offer the homeowner’s the option of selecting full sinkhole coverage or just catastrophic ground cover collapse coverage. Catastrophic ground cover collapse coverage is used when he home is judged to be unsafe to live in. The advantage of this coverage is that premium can be reduced by as much as 50%. However, some private insurance companies do not offer this option.

Sinkhole Insurance

The question some insured’s have is whether or not an insurance company can mandate sinkhole coverage.  They can, but because of the risk involved, many carriers do not. Florida also requires that the insurance money paid out has to be used to fix the home.

Sinkhole insurance will probably get more expensive. However there are a few ways homeowners can mitigate their premiums:

• Increase deductibles on personal items
• Increase deductibles on windstorm damage

An inspector can also be hired for $100 to $150, to check for any likelihood of windstorm damage increase. If there are no problems, the premium can be automatically reduced by law by an average of 12%.

Photo via Seattle Municipal Archives