Sink Holes – The Hole Truth

By Chris Boss, Esq. Yesner & Boss, PL

Effective May 17, 2011, Governor Rick Scott approved Senate Bill (SB) 408, regulating property and casualty insurance. To suggest that the approved bill is confusing is an understatement. After countless reads, luncheons, and discussions with many seasoned sinkhole attorneys, geologists, geotechnical and structural engineers, the most basic explanation of SB 408 is that the new law is going to dramatically affect the largest investment for most consumers…...their home.

This past week, members of the state-run Citizens Property Insurance Corp. voted to approve increases for optional sinkhole coverage, including hikes of more than 2,000 percent in some local areas. While the state Office of Insurance Regulation must approve the proposed rate increases, this will effectively mean that sinkhole coverage in Hillsborough County, currently $156.00 on average would increase to $3,651.00.

The numbers are even more staggering for Pasco and Hernando County. These rate hikes will be devastating. Most homeowners will elect not to carry sinkhole coverage, which, in turn, will provide no relief in the event of sinkhole related home damages. In those instances where the mortgage holder will require the sinkhole coverage, the rate hikes will be unaffordable to most, and could contribute even more to the housing crisis. Banks will force place the insurance and require the borrower to pay in an escrow manner – in Hillsborough County such policy would result in an increased mortgage payment of nearly $300!

Many of the Senators that supported the bill are now requesting the insurance regulator deny the rate increase request or to delay the consideration of it. Prior to SB 408, Citizens gradually increased rates by a maximum of 10 percent annually. The passage of SB 408 eliminated the cap at which Citizens could raise rates, allowing Citizens to hike rates to the eye opening numbers reflected above.

Even more alarming, assuming that the homeowner will have available sinkhole coverage, the passage of SB 408 created additional provisions designed to limit consumers to access policy proceeds. Such provisions include a new process for insurers’ investigation of sinkhole claims, changed the definition of a sinkhole loss to include a further defined structural damage to occur, and limited the timeframe for filing a claim from five years to two years.

While it is undetermined at this time whether the insurance commission is going to allow the rate increase for Citizens, which private insurers will definitely follow suit, one thing is certain: NOW IS THE TIME for consumers to pursue any potential claims if they are exhibiting sinkhole related damage to their home. Otherwise, the time may run out before they can protect their interest.

About the Author
Christopher W. Boss is co-owner and a managing member of Yesner & Boss, P.L., a law firm with offices in Tampa, St. Petersburg and Sarasota. Yesner & Boss offers the full range of practice, including personal injury, bankruptcies, litigation, business law, family law, wills, trusts and probate, residential and commercial real estate closings and foreclosure defense. Visit www.yesnerboss.com.