Below is an editorial my partner, Ted Corless, posted on another website Its a good read.

An image of the Earth giving way and swallowing Bruce Willis whole is the stuff of summer movie blockbusters.  Yet the way in which the powerhouse insurance lobby has made sinkhole coverage nearly obsolete in Florida is more terrifying than anything Steven Spielberg could have directed.  I am a Tampa lawyer who once represented several large private insurance companies and now I represent home­owners, and I will share some explosive realities about Florida’s sinkhole laws, or as I like to call them, the insurance industry’s “Get Out of Jail Free Cards.”

Sinkhole coverage in Florida does not exist because the laws are written in such a way that no one meets the standards for coverage.  Although most insurers claim they will offer “standard sinkhole coverage,” they use overcomplicated underwriting criteria to deny all requests.  For example, under Citizens underwriting guidelines, any home located within three miles of water (including a golf course water hazard, a lake, pond, or river) will not be covered.  If you live in Florida, you can understand how restrictive and absurd this is.  To say state-run Citizens Property Insurance Corporation (“Citizens”), which has 1.3 million insureds statewide, reimburses people for sinkhole damage, is Mary Shelley type of fiction.

Florida and its legislature are fiercely protective of state-sponsored Citizens, which was created in part because private insurers would not write certain homeowner policies in Florida as the risk exceeded the market.  Citizens, who metamorphosed into the largest insurer in the state, has refused to pay sinkhole claims and rather than address how to evaluate credible claims, their lobby destroyed policyholder’s chances of being reimbursed for sinkhole damage with the passage in 2011 of Senate Bill 408.

The Florida Legislature is in cozy cahoots with the insurance lobby.  During the 2011 legislative season, the insurance lobby paid millions in the reelection campaigns of several Florida legislators.  “Some of my colleagues have suggested that the largest expansion of gambling in the state of Florida has been with Citizens,” says Sen. Garrett Richter, a Naples Republican and chairman of the committee that pushed for Senate Bill 408.  Richter further observed passage of the bill would guarantee the GOP at least $1,000,000 in campaign funds.

I explained to the Tampa Bay Times in December 2011 that, “Once that bill got in the hands of lobbyists, it created a lot of push to do anything that would discourage valid claims.  It’s one giant mashed potato.”  Specifically, Catastrophic Ground Coverage Collapse, described as the “alternative” to sinkhole coverage, is a misnomer.  People think coverage applies to “significant” losses but most sinkholes cause minor damage, not dramatic dropouts.  In fact, deaths from sinkholes are extremely rare.  As to the loss of life in Seffner, Florida, under the definition of Catastrophic Loss, the loss is not covered because it occurred as a result of the slab of the home dropping, and pursuant to the underwriting guidelines, the slab is not a “structural member,” and is not within the scope of a sinkhole loss.

The judicial branch may be aware insurers are seeking to write their own laws so the rules of the game heavily favor their team, but judges are not always successful at reigning in stupidity.  Hillsborough County Circuit Court Judge Sam Pendino in 2010 denied a motion brought by USAA Casualty Insurance Company in the case of Jackson v. USAA Casualty Insurance Company for an application of a technical definition of structural damage in a sinkhole case to empower USAA to deny more claims.  Judge Pendino found the Florida Legislature did not intend for the technical definition to apply yet USAA defied the judgment and continued todefine structural damage narrowly.

Despite all it has going for it, Citizens is being Grinch-greedy by further limiting sinkhole coverage as it requires homeowners to pay 10% of their home’s insured value before Citizens pays for any repairs.  Citizens’ representative Christine Ashburn said the change is necessary to reduce thecompany’s “exposure” to sinkhole claims but State Rep. Mike Fasano, an ardent Citizens critic, calls the higher deductible a “ploy” to raise premiums “through the back door without coming to the Legislature.”  Citizens claims they collected $207 million in sinkhole premiums from 2007 to 2011 but paid out $1.173 billion in claims.  These numbers are grossly inflated and are as legitimate as Bernie Madoff’s tax returns.  Moreover, the company maintains nearly 7.1 billion in equity while actively ignoring its responsibilities to its policyholders.  If you do the math, you see Citizens is not playing fair and they should be kicked off the playground.

Citizens admitted to mishandling claims but they boast immunity because their agents do not have a fiduciary duty to their policyholders as a state-run company.  This begs the question, where are the private insurers to write sinkhole policies in Florida.  Insurance companies who sell auto and other insurance products here should be obligated to provide reasonable coverage for damage caused by sinkhole activity.  The cowardly lion in this metaphorical production of The Wizard of Oz—Rick Scott—failed to bring in private insurers to offer sinkhole coverage, rendering Floridians at the mercy of Citizens, who is nearly untouchable under the law.  David Beasley, president of the Florida Association of Public Insurance Adjustersstated, “Putting the interests of insurance companies ahead of those of the Florida residents they are supposed to protect is unconscionable.”

There are a myriad of credible sinkhole claims, and the situation is not going to get better unless we mobilize a policyholder’s lobby.  English jurist William Blackstone wrote, “It is better that ten guilty persons escape than that one innocent suffer.”  When it comes to sinkhole claims, I have seen the issue from both sides of the fence and I believe “It is better ten bogus sinkhole claims are covered than one legitimate claim goes uncompensated.” 

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