October 18, 2012 — Florida sinkholes continue to claim homes across the state. In what Harley Means of the Florida Department of Environmental Protection calls a “perfect storm,” rainwater from recent Tropical Storm Debby combined with Florida’s drought conditions have created conditions ripe for sinkholes. Unfortunately, the heightened sinkhole conditions are working against home and business owners trying to protect their property and structures as sinkhole insurance rates are approved to increase.
Sinkholes are the product of the limestone and calcium carbonate rock that makes up much of Florida’s ground. Rainwater, which is slightly acidic, eats away at the limestone, creating open spaces beneath the surface. When the ground above the open space becomes too heavy, the ground caves in and a sinkhole is formed. Sinkhole activity is especially prevalent when there is rain during times of drought. Thus, Tropical Storm Debby set in motion many sinkholes in northern Florida.
Sinkhole insurance is available to Florida residents through both public and private funds. However, Florida’s largest insurer, state-run Citizens Property Insurance, has recently reduced its sinkhole coverage and removed around $135 million worth of discounts for homeowners after it conducted home inspections in 2011. To add insult to injury, Citizens’ board of directors voted in July 2012 to raise premiums by up to 50 percent in the hardest hit sinkhole areas of the state.
The increase is on top of a 10.2 percent rate increase on non-sinkhole coverage. Overall, the rate hike will cost homeowners about $235 million. However, significant increases could continue year after year. For example, in sinkhole prone regions like Pasco county, rates would have to jump from $1,379 to about $9,650 to be financially feasible for Citizens.
While Citizens’ president, Barry Gilway, said the company was “selectively moving rates higher in a very measured way so that over time, we can be appropriately positioned in the marketplace,” others accuse it of making its rates more expensive to push home and business owners into the more limited private market to avoid paying on sinkhole claims.
Citizens and other insurance companies have been hit hard by sinkhole claims in recent years, with Citizens claiming over $1 billion in losses related to sinkhole damage. Nevertheless, the rate hike comes as Floridians are dealing with low property values and high unemployment.
Sinkhole insurance is a necessary evil for Florida home and business owners. Commercial property is as vulnerable as homes to sinkholes and the potentially catastrophic damage they cause. However, business owners and others should be cautious about paying too much for coverage or using an insurer that refuses to pay out on valid claims.
Insurance companies are businesses and making money is the name of the game. If your insurance company is putting profits before people and refusing to honor obligations under its sinkhole policy, contact an experienced sinkhole attorney to discuss your situation and your rights.
Article provided by Williams Law Association, P.A.
Visit us at www.sinkholelawyer.com