Some homeowners get a sinking feeling
If signed, bill could cancel sinkhole coverage
Updated: Thursday, 04 Jun 2009, 6:38 AM EDT
Published : Thursday, 04 Jun 2009, 5:03 AM EDT
NEW PORT RICHEY – The blinds can be drawn, but Victoria Houser nonetheless sees the sunset in her bedroom thanks to a stair-stepping crack in the wall that descends to a sinkhole.
Houser, who has lived in the home for 22 years, says is thankful to be covered by Liberty Mutual Insurance, which is currently considering a claim for the sinkhole damage.
"It’s pretty scary," she said. "We would really be stuck if we didn’t have sinkhole coverage. I don’t know what we would do."
Houser’s luck could soon change, as a bill awaiting Governor Charlie Crist’s signature would allow for cancellation of private sinkhole coverage in Pasco and Hernando Counties — including hers. Under Senate Bill 742, private insurers could "non-renew" sinkhole policies beginning next year. In the same notice, insurers would offer sinkhole coverage as an add-on at a higher rate and require an inspection at the owner’s expense.
"It’s not a good idea, especially in Pasco and Hernando since it’s a very sinkhole prone area," said Bill Newton of the Florida Consumer Action Network. Newton fears insurers will raise rate so high that many homeowners will balk at the premium and inspection, choosing to go without sinkhole coverage.
"And sinkholes happen," Newton said.
New Port Richey Senate Mike Fasano, who helped write the bill, said it is modeled after a pilot program being tested by government-run Citizens Property Insurance and is intended to benefit homeowners.
"It’s worked very well," Fasano said, noting that Citizens’ overall property insurance premiums decline 45 to 50 percent when sinkhole coverage is dropped.
Fasano said sinkhole coverage is often just "bells and whistles" and that catastrophic collapses, such as those that swallow homes, are covered under homeowner’s policies even if there is no specific sinkhole coverage.
"If you want to have the cracks in your driveway, cracks in your drywall type coverage, that’s what we call the bells and whistles. And you’re going to have to pay extra for that," he said.
Florida Insurance Council Spokesman Sam Miller said on Wednesday afternoon that he was unable to immediately say whether insurers expect the bill to reduce their overall risk in Florida, which is often been described by the industry as a losing venture.
Miller said rate increases for add-on sinkhole coverage must be approved by state regulators in the same forum all other property insurance rates are scrutinized.
Newton said consumers — especially those who drop sinkhole coverage — are likely to loose if the bill is signed into law.
"It’s one heck of gamble," he said. "If you’ve got enough money in the bank to replace your home because of sinkhole or damage, then fine, you probably don’t need any insurance for this. But most of us don’t."
Governor Crist has until June 18 to consider Senate Bill 742.
If he signs the bill, it becomes law January 1, 2010. However, private insurers could begin mailing cancellation notices as early as the end of June, according to the Florida Office of Insurance Regulation in Tallahassee.
That leaves Victoria Houser watching the mailbox — and her step.
"You really kinda wonder what’s going on underneath your feet," she said of the unwelcome neighbor beneath her home