Sinkholes are back in the news again in Florida. Sinkholes have once again attacked the residents in one of the largest and fastest growing retirement community's in the world. That community in the news is the city of The Villages, Florida. The incursion of the sinkhole in The Villages was on or around Saturday April 19th 2014. This disruptive hole in the ground threatened several homes in the area. An offensive has been launched to subdue the sinkhole and protect the homes. The community is concerned about any more possible strikes to its sovereignty. They are now standing guard and watching for any visible signs of movement on the ground.
This recent invasion of sinkholes in The Villages has sparked a dialogue between Villagers on what protection to have on their homes. Insurance in Florida is very tricky and sometimes hard to understand. Also we have so many snow birds in Florida ( retirees that maintain another residence outside of Florida) that are unfamiliar of our laws or do not realize that the definitions of coverage's might be different. Insurance confuses a lot of residents in Florida, but could you imagine thinking one thing and its another. The Villages has a lot of residents from out of state and even the ones from this state might not be aware of the differences.
First of all it is okay not know every insurance law and regulation in Florida; to most people its boring and incomprehensible. This is the reason you go to an expert like me, an Independent Insurance Agent. On the other hand I find it enjoyable and entertaining to learn the laws and know them inside and out. Sinkholes (the enemy, as I call them) are under the policy definitions for the event that insurance company's provide coverage for. What I mean is that you have two coverage's in Florida that list Sinkholes and define the manor for which you are covered. Just like Collision and Comprehensive coverage on your policy for your car, if you have that. The car or auto is covered, however Collision covers some acts while Comprehensive covers others. The coverage's on a policy in Florida for sinkholes are Catastrophic Ground Coverage Collapse and Sinkhole Coverage.
Catastrophic Ground Coverage Collapse is standard on any home policy in Florida. Here is a link to the Florida statue for this coverage on a policy. (
Florida Statute ) That web page provides the definitions set by Florida Law for that coverage. It also gives information on Sinkholes, how they are defined by law and additional coverage under the law. It is kind of confusing and hard to understand for most. That is why you should also seek information from a Florida certified registered insurance agent. They can and should answer all your questions related to insurance in Florida. They are here to help you understand what is and is not covered. I also recommend seeking out more than one agent just to make sure your are getting the right advice and not just a sales pitch. Insurance agents receive commission on what insurance policy's they write. Typically they also draw more commission for adding coverage on to a policy, like "sinkhole coverage".
Being an insurance agent licensed in Florida for over 15 yrs, I have gained a lot of experience and have accumulated a vast knowledge. I actually enjoy educating my clients, family, friends and anyone I can about Insurance. I am a insurance nerd at heart, if there is such a thing. Below I have a post I made to a discussion that villagers were having about The Villages and sinkhole coverage. I stated in the post and I also will state again. I do not make insurance choice's for anyone, other than my family. I advise on insurance and make recommendations on coverage's. Many factors go into making a decision on insurance and it is up to the insured to make those decisions. I go by the law in Florida and help my clients to the best of my abilities. I am not just a sales person or a call center that pushes products or does not have an understanding of what their clients needs. I believe in giving my clients the right price for the best coverage.
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Protecting yourself financially
from a sinkhole is a challenging question. I am a local independent insurance
agent, my family has been in the insurance industry for decades and I have been
an Insurance Agent in Florida for over 15yrs. This coverage in Florida was much
easier a few years ago, because it was not a “buy back” or optional coverage,
like it is today. Insurance companies in Florida prior to 2011 would
automatically cover anything to do with a sinkhole, up to policy limits, until
a few years ago. To understand this comprehensive coverage you must first
understand the insurance industry term vs. the “real world” term, below will
hopefully break it down in a way you will understand the differences and
coverage’s.
Let’s get the legal out of the
way…“YOUR POLICY PROVIDES COVERAGE FOR A CATASTROPHIC GROUND COVER COLLAPSE
THAT RESULTS IN THE PROPERTY BEING CONDEMNED AND UNINHABITABLE. OTHERWISE, YOUR
POLICY DOES NOT PROVIDE COVERAGE FOR SINKHOLE LOSSES. YOU MAY PURCHASE
ADDITIONAL COVERAGE FOR SINKHOLE LOSSES FOR AN ADDITIONAL PREMIUM”
(Florida Statutes 627.706). If I just had that information I would think that I
would need the addition coverage of comprehensive sinkhole coverage, however
this might not be the case.
First I would like to state
that I would never tell anyone what to buy, I just like to educate clients
before buying any coverage. Also, every insurance company might have
slight coverage differences in their policies, so it is up to the consumer to
check their policy or check with their insurance agent.
The dwelling is defined as the home
and any ATTACHED structures to the dwelling that which are permanent (driveways
& screened enclosures may or may not considered part of the dwelling). So
we have determined the house is covered, how about everything else?
Your standard coverage does not
cover a potential sinkhole, in which a sinkhole affects your property.
Examples: cosmetic issues, settling, cracking, grass, trees, fencing that
which does not a crate an unsafe environment, etc… Coverage is available to
cover most of those thing. This coverage will have an added cost and a
deductible of at least 10%. Which means that if your house is 300k you
are responsible for 30k. To obtain this coverage you must pay for an inspection
after you purchase the policy; its non-refundable & does not guarantee
coverage. The inspector will go over your home looking for any possible reason
not to cover your property. Also every insurance carrier has a certain radius
from your home they will check before coming to your home and if a sinkhole had
appeared they will not issue the coverage. So, if you do get approved for
sinkhole coverage you will be covered for those extra things. This is the
tricky part about sinkhole coverage. If something happens like in this article
you will be responsible for 10% and if the repairs cost is under that then you
are responsible for all of the cost. There are repercussions to filing a claim
under either coverage; the property will be uninsurable with most insurance
companies. You will also limit any potential buyers for your home due to it
being uninsurable. If the carrier finds that it’s was not a sinkhole causing a
problem, for whatever other reason they will not cover it and it will still
show as a claim on your claims history with no payment. So now, you paid for an
inspection, the premium every year, and even have a 10% or more deductible, so
if you make a claim you may not be able to find insurance and may not get the
insurance company to cover. I do understand that a claim needs to be made if a
sinkhole does appear and your house is unsafe or condemned, there is no way
around that you have no choice at that point. But, if it’s not affecting your
dwelling I recommend paying to have it fixed yourself since you will be paying
for it anyways, that way it’s not a claim. If you cannot pay for that fix
or do not want to then you can wait it out and see if it stabilizes its self.
If it does not then eventually it will lead to the dwelling being affected and
then covered under the catastrophic coverage collapse. In my opinion I just do
not see how the extra protection will serve my clients any more then what is
already covered. These events are horrible and unfortunately are something we
will need to live with in Florida.
I would also like to put sinkholes and sinkhole coverage in a different way. See if this helps you understand:
In your house you have a wall, typically drywall, and behind it are pipes carrying your water supply. You might not know exactly where the pipes are but you know they are there. One of your pipes starts to leak a little but you are not aware. Then after time you notice that the drywall is discolored, soft, wet or mold. So what do you do about the discovery you made. Now you call the insurance company, the leaky pipe may not be covered but the resulting damage would be. That's why a lot of major national carriers do not provide Home insurance in Florida. They might claim to be about caring for people on TV, yet when the bottom line wasn't enough for them in Florida they got out. Trust me I know how some of them can be, I love insurance but that does not mean I agree with all the laws, policies and company's practices. This is not exactly like a sinkhole but I think it gives you a different prospective on it. The Pipes represent the possible sinkhole and the wall is your property.
As a consumer you can make any choice that is available to you, thats one of the things great about this country. However each choice has a different result and could have different consiquences. Please do not rush into any decision that you need to make. Do not base your decision on what someone else has done or told you. You do not know what their circumstances are or people sometimes misrepresent the truth. They might tell you one thing but have done another, that way they look good in your eyes.
I had one client refer me a friend, this friend wanted the same policy as what they had. The client did not tell the friend anything about the policy. The only thing they told them is that I provided a lower quote so they saved money and that I would do the same for them. Unfortunately the home they were insuring was much older, so that made a little difference in the cost. I sent them the quote based on their home and it was higher then what their friend had. Around 300 a year higher, but lower then what they were paying. They could not understand why they could not get the same price for coverage because the homes were about the same size and around the same area. Without disclosing the other clients information, I told them a lot of factors go into quoting a policy. I do not inform them that their friend choose the least amount of coverage, less then what they wanted. Also I found out that the client told his friends a price that was lower then what he really has. So please take any information with a grain of salt.
Just remember that when it comes to insuring anything you have. Make sure that you do not rush into anything. Contact a Florida registered insurance agent, every state is different your out of state agent might not know Florida law. Ask questions when you have them on your policy. Shop around to different insurance agents or company's. My agency is not tied to one or two insurance carriers, I do not have to go by just their rules or policy's. We have over 35 different insurance carriers to choose from, that gives my clients a huge shopping power. You never know what policy might fit their needs better than another or which one has a better rate.
