Florida OIR Approves Citizens’ Sinkhole Filing

The Florida Office of Insurance Regulation today issued the following press release announcing potential homeowners insurance savings of up to 60 percent with the now-optional exclusion of sinkhole coverage on Citizens’ policies.

Should you have any questions or comments, please do not hesitate to contact this office.

 

TALLAHASSEE (05/09/2007) – The Office of Insurance Regulation (Office) issued an order approving form filings for Citizens Property Insurance Corporation, the state’s insurer of last resort. The filings would exclude sinkhole coverage from Citizens’ base policy for all 67 counties.

In Pasco and Hernando Counties, the counties most affected by sinkhole claims, Citizens will send renewal notices without coverage for sinkholes, although policyholders may add this coverage through an endorsement. For the remaining 65 counties, the endorsement will be included automatically although policyholders will have the option of deselecting this coverage.

Policyholders living in Pasco County may have rate savings up to 60 percent if sinkhole coverage is excluded. Rate reductions will be similar for Hernando County where consumers may save up to 58 percent if sinkhole coverage is excluded. The savings would most likely be in the 2-3 percent range for the other 65 counties.

“The impact of this significant insurance option will provide an immediate reduction in premiums for residents of Pasco and Hernando Counties who choose to participate,” noted State Senator Mike Fasano. “I applaud the swift work of the Office of Insurance Regulation and Citizens Property Insurance Corporation to implement the sinkhole option created by the Florida Legislature,” Fasano added.

Although sinkhole coverage can be excluded, the recent legislative reforms outlined in House Bill 1A ensure that catastrophic ground cover collapse is still mandatory for all residential policies issued in Florida. Catastrophic Ground Cover Collapse covers only the situation where a house is condemned by local authorities. In contrast, sinkhole claims may include severe cracks in the walls of a home. This form approval follows a previous order issued by the Office on January 31, 2007.

Rates for sinkhole coverage have been a difficult issue for the past few years since many private insurers stopped writing in Pasco and Hernando counties, and much of the sinkhole risk has been in Citizens. During the 2006 Legislative Session, the Legislature ordered an independent study that developed a “presumed factor” of 14.4 percent average savings for sinkhole coverage. Citizens filed for its planned reduction in early January prior to the Legislative Special Session on insurance reform. During the 2007 Special Session, the Legislature mandated further discounts for consumers who elect the 10 percent deductible for sinkhole damage, or elect to exclude sinkhole coverage entirely.

The order signed by the Office approved the form filing for homeowners and dwelling policies.

Click here to view a copy of the order.

 

Citizens Property Insurance Corporation today issued the following press release, also today: