In May 2011, Florida legislators passed Senate Bill 408, reforming the insurance industry in the state in an effort to reduce what they deemed as fraud. Some of the provisions of the bill allowed private insurance companies to raise premium rates for sinkhole coverage, let Citizens Property Insurance lift caps on sinkhole insurance premiums and deny sinkhole coverage completely. Critics of the bill argue that insurance company actions denying coverage will have a devastating effect on the real estate market.
Need for Sinkhole Insurance for Florida Homeowners
Homeowners in Florida clearly need sinkhole insurance. In October 2011, the Florida legislature heard testimony that homeowners in Hernando County had filed 1,232 sinkhole claims so far in 2011, up from 877 in 2010. The sinkhole claims lowered property values and correspondingly reduced the government revenue from property taxes by $283 million.
Denying Coverage to Florida Homeowners
Despite the great need for sinkhole insurance, it is more costly and harder to obtain now. As a result of Senate Bill 408, Citizens raised its sinkhole coverage premium rates. Florida's insurance commissioner allowed a 32 percent statewide increase. Additionally, insurers have switched from denying individual sinkhole claims as they had done in the past to simply refusing to offer sinkhole coverage at all.
Damage to the Real Estate Market
Those who opposed Senate Bill 408 point to the damage the insurance industry's rate hikes and denials of coverage already have done and will continue to do to the real estate market. Many mortgages require homeowners to have sinkhole insurance, including FHA mortgages. If people cannot obtain sinkhole insurance, they will not be able to buy homes. There is a danger that the depressed Florida real estate market will recover even more slowly than it is because of the lack of availability of sinkhole insurance coverage.
Insurance companies often resist paying on sinkhole claims. Senate Bill 408 included provisions that made it even more difficult for homeowners to recover for sinkhole damage. If you have sinkhole damage to your home and your insurance company is disputing your claim, consult an experienced Tampa sinkhole attorney who can advocate on your behalf.
