To Villagers future Villagers and anyone else that might be interested
Recently
our insurance office has been flooded with calls regarding home
insurance in The Villages. The calls have ranged from new buyers in TV
to current residents. Not every call has been the same but the majority
are concerning Sinkhole Coverage. With the recent news coverage on
Sinkholes in The Villages, it has heightened the concern level on the
coverage. Insurance laws and definitions can be a bit confusing to the
general public, especially when it comes to Sinkholes.
Since
The Villages is a melting pot of residents from all over the country,
most might not understand the lingo. I would like to first recommend
contacting your insurance agent so they may answer your questions and
your concerns on your specific policy. Or you may can contact my office
where we would be happy to go over your questions, so that you will have
a better understanding. I always make it a priority in my office, so
that our clients are aware of how and what they are covered for. Nothing
is worse than when tragedy strikes and not being sure if you are
covered. I would hate that feeling and hope that none of my clients
would ever feel that way.
So
I would like to go over a few basic things about home insurance in
Florida and how it covers what the media covers as Sinkholes. Florida
has a mandatory coverage on all home policy's that is called
Catastrophic Ground Coverage Collapse or CGCC Coverage which is defend
under 627.706 of
Florida Statutes. This is the coverage that would cover your home if it
is affected by the ground opening a hole either taking your home
completely in it, making it unsafe or being condemned. Also if the
ground affected your home and had the same results as I stated before.
This is standard coverage on all home polices in Florida. This coverage
deductible is under your all other peril deductible, the coverage also
DOES NOT need to be added it is standard on all polices as of May 2014.
Confusion
on this coverage is a result of many things. Florida chose to name the
coverage Catastrophic Ground Cover Collapse instead of the common
public/media term Sinkhole. Additionally insurance companies were
complaining about paying out a large number of claims from fraud or what
they considered non major events. So the state changed the law
concerning Sinkholes a few years ago to separate the coverage and
protect the insurance companies. Before the state changed the law, it
did not matter how the state and insurance companies in Florida defined a
Sinkhole. Because it was all standard on all polices and the coverage
covered all aspects of a Sinkhole. Hence no one cared or questioned that
it was called Catastrophic Ground Cover Collapse. Now that it is not
the same coverage as before it has become an issue.
Another
reason the coverage is confusing is that when you watch the news you
are not going to hear a report on Catastrophic Ground Cover Collapse.
The media will use the common term Sinkhole, that is what the public
understands it to be. Therefore when you see your policy or ask about
Sinkhole coverage and it says or we say CGCC coverage it’s a bit
confusing. It is totally understandable to have that confusion,
especially if you are coming from a state where it is called sinkhole
coverage on your policy.
When
the state recently separated the coverage they reduce the coverage of
CGCC and allowed insurance companies to provide an add on. The add on
coverage is called Sinkhole coverage, now adding more fuel to the fire
of the confusion. As an Insurance agent I do not have the ability to
make common sense changes in wording to limit the confusion. I do see
how it is confusing to the public. Unfortunately this is how the state
and insurance companies have made it in Florida.
The
add on coverage called Sinkhole coverage might not provide the coverage
that you would think the name would provide. Sinkhole coverage is also
defined in statute 627.706
as well. This coverage does not cover your home if it falls into a
sinkhole. That is covered under the CGCC coverage on your policy.
Sinkhole is a comprehensive coverage that in layman terms would cover a
possible event not yet opened, a surface event that does not cause the
home to be unsafe or condemned. However, it is not a guarantee that
those events will be covered. The law gives a little leeway to the
insurance company, if they say it is from settling or a non-sinkhole
then they do not have to pay a claim.
This
coverage also does have requirements and deductibles that differ from
your standard policy. You must pay for a sinkhole inspection upfront
before any company will added the coverage. Sadly the turn down rate
with the inspection is very high, new homes is a little better but older
homes are almost always turned down. If you do get approved for the add
on it does have an extra premium, not very much though. The deductible
is where the big significance is in the coverage. Sinkhole coverage has a
10% deductible, which means if you have a 300,000 dollar home the
insurance company will pay out after your pay 30,000. This is a very
high deductible that does come into play when you need to make a claim.
That means the repair for damage must be so significant that it is more
than you deductible and not significant enough to cause your home to be
unsafe or condemned.
Just
remember when you see Sinkholes on the news, like the ones in The
Villages 99.9% are significant and are covered under the standard CGCC
coverage. Recently in the news a Villager had an issue with her outside
air conditioning unit being affected by a ground event. She did have the
add on Sinkhole Coverage to her policy. The repair to fix the issue was
also under the deductible amount on the Sinkhole coverage. That means
that she had to pay out of pocket the over 27,000 to repair it, despite
having the coverage. She is not a client of mine so I am not involved in
her claim, but if she made a claim to her company they now recorded her
having a possible sinkhole. Once you make a claim of a sinkhole you
want it to be a significant claim because now that home will be harder
to cover in the future. So not only is she going to pay for the repairs
herself but now she might have hurt her financial future without any
benefit from the insurance company.
I
am not for or against this or that coverage. I always want to make sure
that my clients know what they are getting and what it covers. This is a
confusing topic when it comes to insurance. CGCC coverage does cover
your home from a significant event that cause your home to be unsafe or
condemned. It does not cover the possibility of a sinkhole or damages
that do not make it unsafe or condemn it. Sinkhole coverage does provide
the possibility of those coverage’s but not are not guaranteed. You
must endure and pay for their approval process that produces mostly turn
downs on the sinkhole coverage. Understand the fact that you must come
out of pocket the 10% deductible. Also realize that for the coverage to
be useful the event must be so significant to be more than the 10% and
not so significant to be covered under the CGCC coverage. Then weigh if
the event is major enough to notify your insurance carrier to make a
claim and possibly hurt your financial future.
I
do not make insurance decisions for my clients, I only provide
information and my professional opinion. What coverage’s are chosen are
up to each individual. Be aware of what you have and if you have any
questions please ask your agent or call my office.
Jaime Goldsmith, Insurance Agent
HomeTown Village Insurance
352-751-5454
