While sinkholes remain somewhat of a geological phenomenon, they are a virtual nightmare for property owners and insurance carriers alike-especially in Florida. Just this past year, State legislators passed Senate Bill 408, a comprehensive insurance reform law that lawmakers claim would reduce fraud. But, it may also limit many rights of insurance consumers. The most recent and controversial aspect of the new law came to light when Florida's Citizen's Property Insurance Board of Governors announced increases in sinkhole premiums.
The Citizens Property Insurance Corporation was established by the Florida legislature in 2002 to provide insurance protection to Florida property owners. In July 2011, the Citizen's Board voted unanimously to increase sinkhole premiums from 400 to 2,000 percent for some areas of the state.
Skyrocketing Rates Blamed on Valid Florida Sinkhole Claims?
Citizens defends the premium increase as necessary given the recent increase in sinkhole claims across the state. Sinkhole claims have tripled over the past five years. In the first nine months of 2010, nearly 7,000 claims had been filed. Florida reports that sinkhole claim payouts were nearly $1 billion between 2006 and 2010.
With many smaller insurers out of the sinkhole coverage market, Citizens stands as the major provider for sinkhole coverage, with 1.4 million policies in force. The company reported payouts in the $250 million range as compared to $32 million in premiums collected.
Many challenge the insurance industry's position on the sinkhole issue. Opponents argue that property insurers collect $9 billion in premiums per year, which amounts to a fraction of what has been paid out over the past five years. They also argue that despite coverage, many sinkhole claims-in some areas 75 percent-are denied. On review, these increases could cost consumers thousands more each year.
Following pressure from consumers, state officials and some lawmakers, Citizens recently voted to phase in approved rate increases. Under this proposal, Floridians will see an average 50 percent increase in their sinkhole rates for 2012; however, the Office of Insurance Regulation will make the final decision on proposed rate hikes.
Whether you are affected by the rate hike or have experienced sinkhole damage to your Florida property, a Tampa sinkhole claims attorney can help you understand your policy and your rights under that policy.
