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Citizens Proposed 2000 Percent Sinkhole Spike

July 26th, 2011 by flanews

Some Citizens Property Insurance customers may soon be dealing with a two-thousand percent increase in their sinkhole coverage. To put that in perspective… if your sinkhole policy costs 150 dollars a year right now… a two-thousand percent increase… would raise it to 3-thouand dollars. And that doesn’t include the rest of your policy. As Whitney Ray tells us, industry experts say the increase is needed because Citizens rates were kept artificially low for the past five years.

This is not the average sinkhole claim. This is a small crack in a foundation or wall. Sinkhole claims have skyrocketed in the last eight years. Citizens paid out 270 million in claims last year and only collected 30 million.

“In insurance your goal is to collect the premium you need to cover those loses and expenses for the term of the rate and in sinkhole that is not occurring,” said Citizens spokeswoman, Christine Ashburn.

Wednesday the Citizens Property Insurance Board will vote on a four hundred percent increase, but that’s just a statewide average. In five counties it would go up 2-thousand percent.

Pinellas is one of those counties facing a two-thousand percent increase. But the average sinkhole policy there cost just three dollars. Multiply three by two-thousand percent and the rate would increase 60 dollars.

In Hillsborough the increase is much higher. The average rate is 156 dollars. The new rate would be 36-hundred dollars a year.

Bob Lotane with the Florida Association of Insurance and Financial Advisors says the proposed increases are so high because Citizens rates have been suppressed for too long.

“It’s been 10 percent for a few years now, and meanwhile we’ve had an explosion of sinkhole claims,” said Lotane.

But State Senator Mike Fasano blames this 48 page bill. It lifts regulations and the 10 percent cap on sinkhole rate increase for Citizens.

“Senate Bill 408 was the beginning of stopping anyone from ever having sinkhole coverage in the state of Florida which would be an economic disaster,” said Fasano.

If the board approves the new rates, they would be given to the Office of Insurance Regulation for final approval. Citizens is the only company writing sinkhole coverage in many parts of the state. The coverage is optional, although most banks require the insurance for barrowers living in high risk areas. So for them it’s pay for the coverage or lose your mortgage.

Posted in Housing, Insurance, Legislature, State News | 12 Comments »

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