Florida Bill Proposes Homeowners Insurance Coverage For Sinkhole Damage

A Florida state senator has proposed a bill that would offer expanded homeowners insurance coverage in areas prone to sinkholes. Senator Jack Latvala proposed SB 1274, which would allow insurance carriers to provide homeowners insurance coverage for sinkhole damage that results in less than a total loss. The bill would revise the current state law, which limits homeowners insurance claims on sinkhole damage to catastrophic losses.

How Sinkholes Form

Sinkholes often form in areas of high rainfall and acidic soil. When rainwater passes through soil rich in carbon dioxide, the water turns into acid. The acidic water then seeps into the underground bedrock levels. When the acidic water comes into contact with limestone, the water dissolves the limestone. The limestone becomes weakened and can no longer support the weight of the soil above it. The wet soil forces the weakened limestone to collapse, causing a sinkhole ranging from a few feet to several yards across.

Current Law Makes Sinkhole Homeowners Insurance Coverage “Not Meaningful”

The current state law governing homeowners insurance coverage for sinkholes was passed in 2012. The law prohibited insurance carriers from writing policies to cover structural damage attributed to sinkholes. The law left property owners without homeowners insurance coverage for significant damage caused by sinkholes, such as cracked foundations, damaged walls and sunken floors. Policy holders could only file a claim if they suffered “catastrophic” damage to their homes. According to Jim Flynn, marketing manager for LRE Ground Services Inc., the policies were “not really very meaningful coverage.”

Homeowners Insurance Coverage Changes Address Sinkholes as “A Way of Life”

The changes in the homeowners insurance coverage laws seek to cover the gaps between catastrophic losses and minor damages that had prompted spurious claims. A Florida property insurance lawyer told a local newspaper that, “Sinkholes are a way of life in the state of Florida.” The attorney also stated that the current law “put a lot of people at risk (and) creat(ed) a dangerous situation where they couldn’t get coverage.” He told the newspaper that property owners should be eligible for homeowners insurance coverage “at an affordable rate with reasonable boundaries.”

Homeowners Insurance Coverage Law Targets “Sinkhole Alley”

The homeowners insurance coverage law would cover three counties in the Tampa area: Hillsborough, Pasco and Hernando. The state’s insurance office reported that two-thirds of the state’s sinkhole damage claims from 2006 to 2010 originated from these three counties, dubbed “Sinkhole Alley.” Sen. Latvala’s current draft of the homeowners insurance coverage law would make sinkhole coverage optional for carriers. A previous version would have made such coverage mandatory.

Source: Tampa Tribune

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