Sinkholes causing problems for Florida’s homeowners insurance sector
Early this week, a large sinkhole opened up in a neighborhood in the Tampa area of Florida. The sinkhole claimed the life of one man and destroyed that man’s house, as well as causing some damage to neighboring properties. Two days after this incident, another sinkhole opened up in the same area. These sinkholes have caused something of a panic for homeowners in Florida, many of whom do not have adequate coverage to cover the damage caused by sinkholes. Most homeowners insurance policies throughout the state lack coverage for sinkholes, which may be a significant problem if these localized disasters continue to strike unexpectedly.
Sinkhole coverage largely misunderstood among consumers
Many homeowners in Florida are now looking for sinkhole coverage, but such coverage does not exist in the state. Instead, this protection comes in the form of catastrophic ground collapse coverage, which is additional coverage that can be tacked onto existing homeowners insurance policies. Like the name of this coverage suggests, it only protects against catastrophic damages caused by a sinkhole, such as an entire property being swallowed up by such a disaster. Minor damages are not covered by these policies, due to state law.
Rising prices of homeowners insurance linked to sinkholes
If consumers want to protect their properties from minor damages caused by sinkholes, they will have to purchase additional homeowners insurance coverage. Some lawmakers note that many people throughout the Tampa Bay area do not have homeowners insurance coverage because policies are too expensive. Those with adequate protection against sinkholes are faced with 10% deductibles and have been seeing their premiums grow by 40% over the past few years. These costs are simply too high for many consumers, leaving them without adequate homeowners insurance protection.
Lawmakers continue trying to solve the problems presented by sinkholes
Florida boasts of more sinkholes than any other state in the country. State lawmakers have been wrangling with the issues of these localized disasters for years, trying to find a way to provide the best homeowners insurance protection to consumers. The state has also been battling insurance fraud concerning sinkholes, which has contributed to the rising rates of homeowners insurance coverage.
