Don’t forget to renew your sinkhole insurance coverage

Pursuant to a new law effective January 1, 2010, homeowners in Hernando and Pinellas Counties will automatically lose their sinkhole coverage.

In order to maintain it, the insured must notify the insurance company at the time of renewal.  If you are like most insureds, you do not pour over your renewal notices, merely to determine if the insurance is the same as before.

The change you want to prevent

While moving from standard sinkhole coverage to catastrophic coverage will save you on premium, it will be a catastrophic loss if your home has a sinkhole.  In order for this new coverage to be of any value, it must cause you home to become so badly damaged that it be condemned.

Seriously – condemned.  It is a requirement under the coverage that a government entity must declare it unfit for human habitation.

This shift has already affected sinkhole claims

Since the new coverage took effect, we have already heard from multiple homeowners caught in this switch.  We even had clients who filed claims and subsequently learned they had sinkhole activity at their homes.

Prior to the insurance company paying to repair the home, the insurance company discovered they were not even aware of the change of coverage and denied the claim.

Imagine, learning first that you have a sinkhole claim (because the insurance company found it), and then that they won’t pay for it.  Nightmare.  Now, you can kiss the value of your house goodbye, unless you want to pay for the repairs yourself.

Be in the know

We cannot emphasize this enough.  If your insurance agent tells you that you do not need sinkhole coverage, fire them and get a new agent.  It is simply too risky in this state, just as it would be too risky to be without earthquake insurance in California.

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