Sinkholes have been quite troublesome in Florida recently. Earlier in the year, the state was inundated with insurance claims regarding damages caused by sinkholes. The majority of these claims, however, were fraudulent, as regulators discovered little to no evidence of sinkholes when investigating properties claiming to have suffered damage. The overwhelming number of falsified claims coming from property owners has caused many insurers to limit the extent of their coverage or otherwise raise the premiums associated with sinkhole insurance. Citizens Property Insurance, the state-funded insurance program, too will be raising its rates.
The insurance program has recently begun ramping up its rates on property insurance. In most cases, the rates have increased by an average of 30%. In regards to sinkholes, however, the program’s insurers are proposing an increase of 428% throughout the state. While this increase may seem gargantuan, it is dwarfed by the proposals for Tampa and Coastal Pinellas County, where rates could go up by 2,238.5% and 2.045.6% respectively.
The ambitious proposals have drawn the ire of the public and legislators alike. Normally, Florida law would prohibit the insurance program from raising rates by more than 10% a year, but a new property insurance bill, SB408, was just passed by the state’s Legislature. The bill allows for insurers to raise rates on sinkhole policy as they see fit in order to account for losses.
Senator Mike Fasano was one of the chief opponents of this bill, but his efforts proved unsuccessful. Suppporters of the bill argued that it would benefit the market by promoting opportunity and giving consumers choice. Fasano says that they now only have one choice: Pay the new rates or go without insurance.