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Sinkhole substitute sinks in senate

By Regan McCarthy


Tallahassee, FL – Florida residents with property damage due to sinkholes may no longer be able to collect on claims through their insurance. Lawmakers in support of Senate bill 408, an insurance de-regulatory bill, say too many claims for what some call cracks in the sidewalk are leaving high costs to be passed on to insurance holders, but Regan McCarthy reports while the bill protects against claims on dimples it could mean homes would have to be nearly unlivable before home owners could bill their insurance companies for a fix.

Senate Bill 408 no longer requires insurance companies to offer sinkhole coverage. The insurance was once offered as part of a typical homeowner's insurance policy but under current law is offered as additional coverage sold at a premium. The new bill would let companies decide whether they'd like to carry the coverage. Senators in support of the bill say that's reasonable as the bill does still require that insurance companies offer coverage for "catastrophic ground cover damage," but Senator Mike Fasano of New Port Richey says that's not enough.

"You know what catastrophic ground cover collapse the definition is? The home has to be in a hole. It is uninhabitable. It cannot be lived in."

Fasano says the bill's language needs to be stronger, requiring insurance companies to provide sinkhole insurance so that people such as those with some types of mortgages will have the coverage that often Fasano says mortgage lenders require.

" If the insurance industry of this state, if they don't have to offer sinkhole coverage, guess what, they're not going to offer it and you're going to have tens of thousands of people in the state that will not be able to get sinkhole coverage."

That's a possibility that Senator Gwen Margolis of Miami says she worries will drive potential new residents away from Florida.

"We have gotten to a point that people don't move to Florida anymore because it's too expensive, it's really too damn expensive. It really is too damn expensive and when they come to buy a house they have these inflated prices to begin with and then they have the insurance piled up on top of that."

But Senator Garrett Richter of Naples says it's not fair to force insurers into what he indicates could be a financially unsound position.

"I will tell you by way of anecdotal information there is a private company that for every dollar in premium they've collected on sinkholes they've paid out 17 dollars in claims costs so right now all policy holders throughout the state are subsidizing these phony, these fraudulent claims."

Richter says he thinks home-owners often make claims then pocket the cash.

"Policy holders are receiving checks, large checks for small cracks. They're taking these checks, they're not repairing the property. They are paying their mortgage off they're buying a boat. We had the appraiser come from a county and testify to the distinctive negative impact on revenue because of the decline in revenue because policy holders were not repairing the damage and just taking this money."

Fasano offered a second amendment requiring insurance companies to repair the damage rather than writing claimants checks, but his proposal didn't get support. Both amendments to the bill failed. The state's own insurance company Citizen's Property Insurance will continue to provide a sinkhole-only insurance option. Governmental have been working to cut down on the number of insured through Citizens but Senator Fasano says he thinks that effort will soon be undone.

"You don't pull people out of citizens by allowing private companies to do something that is required by citizens because if private companies don't provide full sinkhole coverage where are those people gonna go where are those homeowners, those condo owners, those manufactured mobile home owners gonna go to get full coverage? They're gonna go into citizens."

Richter argues that's the role Citizens is intended to play.

Senate bill 408 also changed language used to define "loss" as it relates to the hurricane catastrophe fund and changes the name of the Citizen's "high risk account" to the "coastal account" as the name high risk account has caused concern among outside investors.