August 2013

By now, you may have seen the video of the sinkhole swallowing portions of a forest in Louisiana, but – like all classic films – it is worth seeing again.

Louisiana Sinkhole
Click Image to Watch Video

This video should serve as a shocking reminder of the sudden and brutal nature of not only sinkholes, but of all natural disasters.  Within the past few weeks, we have witnessed numerous sudden and catastrophic collapses – not the least of which include this scene in Louisiana, the violent collapse of the vacation condos near Disney World, and the numerous smaller sinkholes that have opened locally due to the heavy rainfall.

Now more than ever, it is important to check your homeowners insurance policy to verify that you have adequate coverage to protect your family in case your home suffers damage from sinkhole activity, hurricane, fire or other type of loss.  Although you may not be able to prevent Mother Nature from having her way with your property, you can take steps to protect yourself from the financial impact of such loss and to get yourself back on your feet again.

 

Last night, Citizens Property Insurance Corporation held a public hearing on its proposed hikes to the homeowners insurance premiums currently paid by Floridians.  The hearing was requested by former state Senator Mike Fasano in advance of the Florida Office of Insurance Regulation’s upcoming decision on whether to approve the rate increases being requested by Citizens Property Insurance.  Despite the fact that these proposed rate increases would have a dramatic affect on the premiums Tampa Bay residents pay for homeowners insurance, only about three dozen people showed up for this meeting – most of whom were either employees of Citizens or of the Office of Insurance Regulation.

It seems as though Floridians have given up any hope of ever getting a fair shake from Citizens Property Insurance – or any other homeowners insurance carrier in Florida.  Despite the already high rates Citizens currently charges, Citizens is proposing an average increase of 6.6 percent statewide for residential coverage, and an average of 7.5 percent for all properties insured in Florida.  (The difference between the 6.6 percent increase for residential and the 7.5 percent increase for all properties hints that the proposed increase for non-residential coverage is substantially higher!)  Furthermore, these insurance rate increases DO NOT include any proposed increase in the insurance premiums charged for sinkhole loss coverage.  Although the premium for the non-sinkhole loss portion of the policy is set to go up 6.6 percent, the premium for the sinkhole loss portion of the policy is set to go up as much as 20 percent in Hernando and Pasco counties and as high as 50 percent in Hillsborough County!    To quote a long-gone infomercial guru – “Stop the Insanity!”

Remember, we have not had a hurricane or other major loss event in Florida for over 7 years.  Furthermore, any actuarial argument for higher sinkhole loss premiums is specious at best.  The premiums charged for a current policy year can only pertain to losses which could actually come into fruition during that policy year.  Since the passage of SB 408 in May 2011 and the subsequent inclusion of this law into insurance policies, the ability to effectively pursue a new sinkhole loss claim has been reduced to almost nil.  Ergo, for upcoming policy periods, the insurance carriers will not require large premiums dollars to pay sinkhole loss claims which may arise during these new policy periods because, quite bluntly, there won’t be any such claims.  If no sinkhole loss claims to pay – no reason to charge unreasonable premiums.  Despite this fact, Citizens Property Insurance points to data from prior to the passage of SB 408 to support its claim for higher reserves and premiums.  To any logical thinking person (without an agenda, that is), this is nothing more than a lie to the policy holders of Florida.

Someone needs to hold Citizens Property Insurance accountable for its actions.  Unfortunately, as reflected by the meager showing at the public hearing last night, the policy holders of Florida may have already given up hope.