Sinkhole Insurance – HomeownersInsurance.org http://www.homeownersinsurance.org Homeowners Insurance Tips and News Fri, 28 Jun 2013 15:01:02 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.1 Sinkhole Insurance in Pasco County, FL http://www.homeownersinsurance.org/sinkhole-insurance-in-pasco-county-fl/ http://www.homeownersinsurance.org/sinkhole-insurance-in-pasco-county-fl/#comments Wed, 10 Feb 2010 15:38:54 +0000 http://www.homeownersinsurance.org/?p=214 sinkholeSinkhole 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

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Sinkholes Turn Homes to Money Pits http://www.homeownersinsurance.org/sinkholes-turn-homes-to-money-pits/ http://www.homeownersinsurance.org/sinkholes-turn-homes-to-money-pits/#respond Fri, 22 Jan 2010 17:20:10 +0000 http://www.homeownersinsurance.org/?p=179 sinkholeIn some places like central Florida, it’s amazing that anyone would choose to build a home. If you build a home in a swamp, it’s likely to eventually get swallowed up. Just ask the king of Swamp Castle. When it does, you could be facing a severe loss under a new Florida law that kicked in on January 1.

New Sinkhole Law

Under the new law, changes are coming to the way insurance companies can provide sinkhole insurance. The law is designed to help reduce the cost of homeowners insurance premiums for most Floridians, but it may wind up hurting those folks who happen to find their homes being swallowed up by the earth.

The new law lets private insurers change policies to drop portions of sinkhole coverage. This could ultimately cut premiums for residents of some sinkhole-prone areas. Their premium rates could drop by as much as half. The state-run insurance company, Citizens Insurance, has done this for more than a year now.

Why it Rocks

Proponents of the law point to the money that’s been saved in insurance premiums. It’s estimated that as much as $54 million has been saved in premiums. Unfortunately, it isn’t yet certain how many people have found themselves the victim of a sinkhole without any recourse.

Why it Sucks

Opponents of the law suggest that it’s actually harmful to homeowners. The law still requires policies to cover major catastrophic ground collapses, but it doesn’t force them to cover more minor issues caused by sinkholes such as settlement distress or cracking.

The Truth of the Matter

Consumers can keep the additional coverage at an additional cost. In addition, insurance companies are required to notify residents as to which kind of coverage was dropped. Advocates of the law point out that it doesn’t limit consumers in the type of coverage that they can buy, rather it helps consumers who don’t need sinkhole coverage by dropping their premiums, by a significant percentage in some cases.

If you live in an area prone to sinkholes, you might consider continuing the coverage. That way, if the unthinkable happens, you can rebuild. In some instances, you may be able to add a specific rider that will include sinkhole coverage, or at least certain types of damage to your home that can occur from sinkholes.

Photo via Foxtongue

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