Tag Archives: Legislative Action

You Might Lose Sinkhole Coverage in Florida

Sinkhole coverage in Florida

You’ve purchased a home in Florida. You’ve been recommended a couple insurance policies, you’ve looked them over, and chosen one that you’re happy with. You shouldn’t have to worry about your coverage as long as you pay your premiums on time, right? Unfortunately not. As of January 1, 2010, you may lose your sinkhole coverage in Florida if you don’t pay attention.

Keep an eye on renewals

Homeowners insurance policies are annual policies that renew from the annual date you purchased them. Most of the time the process is without incident as homeowners usually pay their insurance through the escrow with their mortgage company.

When the policy renews, you will receive a notice from the insurance company about 45 days before the new period with changes noted in a large stack of endorsements, which are specific changes that will be made to the policy.

These are usually accompanied by a list of endorsements that apply as well. You can peruse these, and then decide whether or not you want to change the coverage. Of course, it’s generally advised that a homeowner looks over their policy even if they don’t wish to change it, but many don’t.

Don’t get tricked

For homeowners in Pinellas and Hernando Counties, a very significant thing occurred as of January 1, 2010. Due to a new law signed, there will be an automatic change to all homeowners policies in these counties. Under the new law, you will automatically lose your sinkhole coverage, unless you request that it be included into your policy.

Unlike other perils, such as fire or hurricane, the State of Florida is playing a game of cat and mouse – but only with the homeowners in these two counties. This was arguably because Citizens Property Insurance used their lobby to get the Florida Legislature to see how many homeowners they could catch who do not read their annual renewal notices.

It begs the question why they did this in two of the most common areas where sinkhole activity is found. Of course, they did it so that Citizens and other insurance companies can avoid their legal responsibility to offer sinkhole insurance coverage.

If you lose your sinkhole coverage in Florida

If you fail to notify your agent before your coverage lapses, you’re stuck in a pickle. Most companies are requiring that any insureds who allow a lapse in their sinkhole coverage can only get it back by paying for a cost-prohibitive sinkhole investigation. These cost between $8,000 and $12,000.

However, if you do one, in the hopes of getting coverage back, and the investigation finds some evidence of sinkhole activity of which you had no prior knowledge, you are most definitely going to be denied coverage. As you can see, insurance companies are handing you a double-edged sword if you don’t watch out.

Florida Representative Bryan Nelson Sponsors Anti-Consumer Choice Bill on Sinkhole Insurance

Fact-checking Bryan Nelson

We hear a variety of claims from politicians, and it can be difficult to dissect which statements are true, or even mostly true. Representative Bryan Nelson has made a few statements that have stood out to me, and I feel obligated to discuss a few facts.

Access to quality, affordable insurance

On his website, Representative Nelson lists “access to quality, affordable insurance” as his first objective as an elected official. He uses the word “quality,” while at the same time sponsors House Bill 1447, which seeks to destroy important consumer options to protect homes from sinkholes and sinkhole activity.

I do not know whether Representative Nelson knows what causes sinkholes, but he lives in an area that is not known for the frequency of sinkhole activity found elsewhere around the state. As such, it would appear that he is more interested in protecting the premiums of his insurance contracts, as he does sell property insurance as an insurance agent.

While we acknowledge the issues with the availability of property insurance in the state, this bill is not the answer.


Representative Nelson was honored last October 2009 by speaking with the GFWC Apopka Woman’s Club, at the First United Methodist Church. While I am sure he touted himself as being “pro-family” and other issues important to the women attending this conference, I suspect he was not completely honest about where his loyalties were.

Specifically, he may not have mentioned that for at least many of the homeowners in Central Florida, sinkhole damage is a significant problem. Seeking now to save his insurance contacts’ money by gutting the insurance coverage probably did not come up either.

Facilitating transparency ins our government

Note, too, that Representative Nelson associates himself with freedomspeaks.com, an organization with its stated goal of “facilitating transparency in our government.”

If Representative Nelson is true to the values of Freedomspeaks.com, then he should come clean about his intentions with House Bill 1447 because, if he wants to limit coverage for sinkhole damage to only 25 percent of the insurance coverage provided, he is essentially gutting the coverage.

This is going to mislead a lot of homeowners, who will confirm the presence of sinkhole coverage, only to discover later that they paid higher premiums for worthless coverage.

Habitat for Humanity

Lastly, Representative Nelson likes to list himself among supporters of Habitat for Humanity. While he wants to support a person’s right to own their own home, he acts at the same time to imperil their property. He’d rather give support to insurance companies, who accept millions of annual premiums and on some policies he even is paid a commission as an insurance agent.

To read more about the ill-conceived bill, read my post, New Florida House Bill Seeks to Gut Sinkhole Insurance. Then, read about what you can do to speak out against Bill 1447.

Write to Representative Bryan Nelson and tell him to Withdraw House Bill 1447

Bryan Nelson’s plans for Florida sinkhole insurance

Representative Bryan Nelson has sponsored House Bill 1447, which seeks – among other things – to limit sinkhole insurance coverage to 25 percent of the limits provided for in a policy. For example, if the coverage is $150,000, you would only be provided $37,500 for the repair of a confirmed sinkhole at your home.

This is an obvious attempt to permit insurers to continue to collect premiums for sinkhole losses, while at the same time offering them virtually nothing by way of real money to fix your home. This is tantamount to telling someone who bought a car that their car insurance will only cover 25 percent of the actual value in the event the car is in an accident.

What should happen

Representative Nelson does not live in a community where sinkholes and sinkhole activity are a threat to the value of his home. For other communities like those in Pinellas, Hernando, Pasco, and Marion, this bill not only exposes homeowners to significant, uninsured losses but also violates our freedom to contract with an insurance company.

If I want to buy the insurance and the insurance company wants to sell it, Representative Nelson and the other pro-insurance lobby representatives should stay out of the way.

How to speak up

I would encourage people to write to their own representatives, and tell them to vote against House Bill 1447. (Search for your representative by address.) Additionally, I would write to Representative Nelson and tell him to stay out of our business in the other counties where sinkholes are a significant problem. If you want, just print out this page and mail it to him.

Send your letter to:

Representative Bryan Nelson
214 House Office Building
402 South Monroe Street
Tallahassee, Florida 32399-1300

The purpose of this move is to take money out of the wallets of homeowners and line the pockets of insurance companies and their constituents. Raise your voice and protect your insurance coverage from this change.

New Florida House Bill Seeks to Gut Sinkhole Insurance

What is Bill 1447

Bill 1447 is an insurance-backed bill designed to completely gut sinkhole insurance. While couched as a bill designed to reduce consumer insurance fraud, its contents are focused, among other things, in essentially ridding itself of sinkhole coverage for Florida homeowners, regardless of how much they want it.

The details: coverage

First, the bill does not expressly eliminate sinkhole coverage in property insurance policies. If it did that, the insurance company would be precluded from taking premiums for it. Instead, the bill seeks to limit coverage to twenty-five percent of the total coverage available.

Meaning, if your insurance coverage is $200,000, you would not be covered or more than $50,000 for the loss, regardless of how severe it may be. This renders sinkhole insurance coverage meaningless because virtually all confirmed sinkholes cost considerably more than this amount to repair.

Obviously, the larger the home (and the coverage), the more expensive the repair is. Even the most modest home with sinkhole coverage would not be able to be repaired for such a modest amount of the coverage.

Our insurance rights

Second, as we hear so much about keeping government out of our personal business, the bill patently interferes with our rights to buy and sell insurance. If an insurance company wants to sell insurance to me, for a premium, and I want to pay it, I should be entitled to do it. The insurance company sets their rates based upon their risks and accepts responsibility for it.

What right does the State of Florida have to preclude me from buying the insurance I believe is necessary to protect my home, which is my family’s largest investment?

The argument

Of course, the argument will be that Citizens Property Insurance Corporation, the “insurer of last resort” needs the break from covering sinkhole losses. If that is the reason for this bill, then Representative Bryan Nelson (who is an insurance agent) should be honest about the bill and call it what it is: an attempt to get rid of sinkhole coverage.

However, doing that would require him to make an honest statement about his intentions, where consumers could be misled into believing that twenty-five percent of the coverage would ever cover a sinkhole loss because it just would not.

Question for Representative Nelson: How many reported sinkhole losses would be fixable with less than twenty-five percent of the coverage? Answer: none.

Shame on you, Representative Nelson. House Bill 1447 is a rip off.

Bill 742 Removes Sinkhole Coverage from Homeowners

Recent legislative action is bad news for Pasco and Hernando Counties

In most of the posts on this blog, I try and remain as neutral as I can, given the fact that people are on the site to gain well-rounded information, not just my perspective on things associated with sinkhole activity.

However, I must break from this for this particular post. Bill 742, signed into law by Florida Governor Crist, is playing a game of hide and seek with the citizens of Pasco and Hernando counties with sinkhole insurance coverage.

A recent history of sinkhole legislature

In 2007, the Florida legislature decided to allow insurance companies to offer an alternative to sinkhole insurance coverage. Instead of having sinkhole coverage, you can, if you wish, purchase “catastrophic ground cover collapse coverage”.

This alternative was designed to offer coverage for sinkhole activity, but only the damage of an immediate magnitude to cause the home to be condemned.

The false premise of the 2007 alternative, though, was the reality that large, open cavern sinkholes occur in less than one percent of the actual sinkholes. Because of this, most homeowners in areas with the most sinkhole claims (e.g. Hernando, Pasco, Marion, and Pinellas counties) elected to keep their coverage “as is” and reject the alternative.

What is Bill 742

Because so few people accepted it, Bill 742 pops its head again. Among other things, Bill 742 deletes “standard” sinkhole insurance coverage and inserts the alternate, catastrophic coverage. Then, if homeowners want to add sinkhole coverage back into their policy, they must notify their agent within 90 days of the renewal period.

Once the sinkhole coverage is gone, you cannot recover it. In essence, the Florida Legislature is trying to “catch homeowners asleep” after they rejected the new alternative. Frankly, this is pathetic.

Taking out important, standard sinkhole coverage, with the hope that people won’t notice, is no way to protect the interests of the people of Florida. Senator Fasono and Governor Crist, shame on you.

Protect yourself

Make sure you understand your insurance policy. It’s incredibly important that you have standard sinkhole coverage – otherwise, you may find yourself in a sticky situation.

If you’re unsure, contact your insurance carrier directly and discuss your concerns.

Have You Checked Your Insurance Policy for Sinkhole Coverage?

When a sinkhole occurs

Any unexpected and dramatic sinkhole damages to your home can be shocking and devastating. A homeowner can be overwhelmed with the multiple issues that arise from the startling and unanticipated effects of sinkhole activity producing property damage to your residence. Most homeowners wonder why such events are happening and what they should do next in these unfortunate situations.

The foremost concern of homeowners who have experienced sinkhole loss should be the safety of their families and being sure there is no risk of imminent harm due to a collapse of the surface soils. If there is any risk of a collapse of the ground around your home, you should immediately evacuate, and then contact the local authorities to secure the property.

What to learn from new sinkholes

Recently, several sinkholes have appeared in Tampa Bay, providing a clear reminder that homeowners need to review their home insurance policies in order to verify they are properly covered for sinkhole damages.

On January 1, 2010, a new law took effect that allows insurance companies to drop sinkhole insurance coverage on policy renewals in Pasco and Hernando counties. All policies will continue to provide coverage for catastrophic ground cover collapse, which applies to extensive sinkhole damages that leave the home in an uninhabitable condition.

If you do have an endorsement for sinkhole loss coverage, you should immediately contact your insurance agent or insurance company to report the claim.

What you should expect

Generally speaking, the claims adjustment and investigation process are slow. Unless you are unlucky enough to have your entire home (or a good portion of it) suffer extensive sinkhole damage, your insurance carrier will likely not be in any hurry to respond to a claim or, for that matter, rush out to visit your home to perform the initial investigation.

Only the appropriately trained and educated professionals (geologists, geotechnical engineers, and engineers) are able to determine if damage to your home is caused by sinkhole conditions.

The professionals are hired by your insurer, and then these experts contact the homeowner to schedule a date for testing at your property. Once the appropriate tests occur and the data is collected, the expert report is prepared that provides an opinion on whether or not sinkhole conditions are the cause of the damages to the home. After that, your insurance carrier should advise you whether or not you have a covered loss.

Sinkhole Attorney Morgan Barfield Appears on Channel 10 News To Discuss New Legislation Designed to Limit Sinkhole Coverage

I spoke last week to a reporter at Channel 10, discussing the new Bill 1447 by Representative Bryan Nelson and why I think it is bad for Florida homeowners. Under the new legislation, residents will automatically lose their sinkhole coverage, unless they request that it be included into their policy.

resume writer service

To learn more about how Bill 1447 will hurt residents in Pinellas and Hernando Counties, read my posts, Florida Representative Bryan Nelson Sponsors Anti-Consumer Choice Bill on Sinkhole Insurance and Renewal Alert for Homeowners in Pinellas and Hernando County.

Have a burning question you’d like to ask about sinkholes? Let us know.

Florida Sinkhole Laws in Flux

Will the sinkhole laws in Florida change anymore in the next couple of years?

This is the question everyone is asking, and while I can’t be completely certain, my guess is that sinkhole laws will continue to change for the foreseeable future. Fortunately, as State Farm will continue to insure Florida residents, we will see some stability; if they had left, those residents would have been left to Citizens Property Insurance, a state-funded entity and the last resort.

Why changing laws are good

While we would never suggest a homeowner opt for a Citizens Insurance policy, the more Citizens is affected, the better the chance the government will make some changes – Citizens is funded by the state, so these changes directly impact the wallet of Florida’s government.

The sinkhole laws in Florida seem to morph every other year or so, and they will probably continue to do so. There is no perfect answer to the sinkhole problem in Florida, so we will simply try to make the best of it and adapt accordingly.

My recommendation is that, as a member of the community, you contact your legislator as sinkhole laws morph and insist that they protect our rights and choices as consumers. (Search for your legislators by zip code.) A lot of legislative activity in the past two years has not been “honest”, and the fact that these laws are not set in stone means there is an opportunity for positive change.

Why homeowners need to fight back

For example, Bill 742 reversed the sinkhole coverage for Hernando and Pasco counties. I say “reversed” because it was automatically taken out of your policy, and you had to request to have it reinstated. (Read more about this legerdemain in my post, Bill 742 Removes Sinkhole Coverage from Homeowners.)

Many homeowners in those counties will be caught unaware, which I think is unfair. As with most consumer issues, it is important to understand your rights and to contact your agent to discuss your coverage for sinkhole activity.

In addition, it’s important to contact your legislator and make your voice heard. Demand fair and reasonable sinkhole coverage for your home while you can!

Florida Legislators Reintroduce 2010 Consumer Choice Act

Is the Florida legislature doing anything to resolve the current insurance crisis?

In June 2009, Florida Governor Charlie Crist vetoed the Consumer Choice Act, which would have allowed private insurers to establish rates independent of the Office of Insurance Regulation (OIR). In his veto message, Crist reasoned that the bill would allow larger, private insurers to “cherry pick,” or sell only to profitable policy holders, while forcing smaller, less capitalized companies and state-run insurer Citizens Property Insurance to underwrite riskier policies. This was and is an important issue in the sinkhole claim arena, especially in counties like Pasco, Pinellas, and Marion, where sinkhole activity is common.

On December 9, 2009, Sen. Bennett and Rep. Proctor introduced the 2010 Consumer Choice Act, which includes changes to the previously vetoed act. The provisions of the proposed legislation are as follows:

  • Allows private insurers to use rates different from rates otherwise set by the OIR. This provision, however, does not apply to policies that are subject to consent decrees or other agreements. For instance, the legislation would likely prohibit State Farm from obtaining increased rates for those policies affected by its consent agreement with the OIR allowing for a flat rate increase of 14.8%.
  • Addresses deficits incurred by Citizens Corporation and requires the imposition of uniform policyholder surcharges of up to 15 percent of policy premiums to curb yearly deficits, before emergency surcharges are assessed.
  • Requires Citizens to obtain a signed acknowledgment of surcharge and assessment liability from insureds who obtain or renew their policies.

Supporters of the legislation believe that these changes adequately address past concerns and will allow all private homeowners’ insurers to offer a policy at a rate that the provider believes will adequately protect the consumer.

Have a burning question you’d like to ask about sinkholes? Let us know.

State Farm’s Departure from Florida Impacts Sinkhole Insurance

How will State Farm’s departure from Florida creates pressure on Florida sinkhole insurance showdown?

Charlie Crist opened the door wide open for State Farm to leave the state of Florida, telling State Farm in response to their announcement, “Good riddance.” Governor Crist is not an especially easy politician to follow, having also commented that the proposed Obama healthcare plan was “cockamamie.” (Cockamamie: something ridiculous or implausible). While these words may provide an outlet for the State of Florida in its dealings with these larger, broader based issues, homeowners may be facing dramatic changes in their Florida sinkhole insurance coverage before this dispute with State Farm is over. (What is a sinkhole?)

I’m unsure exactly how many policies State Farm currently provides in Florida, but they are unquestionably the largest private insurer. I use the word “private” because Citizens Property Insurance Corporation may have more policies, but they are actually an extension of the State and people of Florida. Whereas other, private insurance companies are ultimately supported by the investments and value of the company itself, the people of the State of Florida own Citizens. And while Governor Crist is out lamenting “cockamamie” plans and telling large private insurers “good riddance,” there is no active solution being proposed to resolve the skyrocketing premiums and the instability in the insurance market.

Regardless of whether people in Florida like State Farm or not, the real question remains simple: If the market in Florida – a state facing perils greater than the average bear, like hurricanes and sinkhole damage – is so unstable that we cannot support a large company like State Farm that provides Florida homeowners with sinkhole insurance coverage, then what? Counties with the highest frequency of Florida sinkhole insurance claims – such as Hernando, Pasco, and Pinellas – are finding added pressure to remove their sinkhole coverage entirely. This is unwise and leaves the problem at the threshold of the Florida homeowner.

Have a burning question you’d like to ask about sinkholes? Let us know.