Insurance companies now face massive losses due to sinkholes in Florida

Florida Sinkhole InsuranceSinkholes that are destroying Florida houses are now costing insurance companies in that state hundreds of thousands of dollars as claims begin rolling in.

In fact, in three claims alone linked to sinkholes that cracked floors and broke water pipes, insurers had to pay out over $500,000. Among those three houses in question, none of the homeowners used the money to try to repair their homes.

Instead, they are among the hundreds living in Florida’s “sinkhole alley” – which consists of the counties of Hillsborough, Hernando, Pasco, and Pinellas – who have used their insurance payouts to use the money for something other than repairing the sinkhole damage, such as paying off a mortgage, putting in a new roof, digging a swimming pool, or simply investing it.

Unfortunately, the result is that home values in the area are declining, and millions of dollars are being taken away from local government tax revenue, when they are already struggling to recover from the recession.

The Florida Legislature has been working continually since 2005 to try to find a way to ensure that insurance companies will both cover and repair the sinkhole damage, while at the time reducing the number of claims that can be considered questionable.

Most recently, the law was changed in May 2011, to require homeowners to actually repair the damage to their homes that was caused by sink holes, and new regulations were put in place that make it less appealing for a homeowner to file a lawsuit against their insurers.

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