Posted on 04/19/2011 4:18:01 PM PDT by I still care
Hurricanes and other natural tempests make Florida a risky state for homeowners and insurers alike. But add sinkholes to the mix, and you're looking at an actuary's nightmare.
The number of sinkhole claims in the state -- for reasons that could range from fraud to changing weather patterns -- has skyrocketed over the past few years, a trend that has sapped insurance companies of millions of dollars. Florida lawmakers are now coming to the industry's defense with legislation that would lift a longstanding requirement that they offer sinkhole coverage.
(Excerpt) Read more at foxnews.com ...
For those not aware, about 2003 Homeowners Insurance shot up through the roof. I mean, from $400 for a small, old cheap house to 2K. People were desperate. And while everyone assumed it was hurricanes, it wasn't. It was sinkholes.
It works this way. Your neighborhood has sinkholes. You call in a company. They examine, they find something under your pool, etc. (We actually have caves under my development). You call a lawyer. Now it's out of your hands, sit back and relax.
The insurance company sends you a giant check, almost the complete value of your house. People tell me they hardly verify. The guy next to us got a 50K check on an 80K house for something under his driveway. You cash the check, and sell the house for 50K to a rental agency, who doesn't care if it sinks into the ground. They just keep fixing the doors. They have deep pockets, unlike a homeowner.
You've made a nice profit.
My neighbor across the street, when I told him I might have a sinkhole, said, you just hit lotto.
About 2003 this started to sink the insurance companies, and everyone got out of the market, except the state company, Citizens. The church near me - their insurance jumped from 8K to 60K. My homeowners association raised quarterly rates from 25 a quarter to almost 70, because they were getting blasted. Nobody could sell their homes - why move to FL to retire if you HO ins was more than your taxes ever were? You would buy a nice house, then get a call from the realtor that there was a problem getting the house covered for the mortgage.
Old people just dropped coverage. The speculators market struggled for awhile and then fizzled. The man who bought my house for a turnover lost his shirt. I kept waiting to see it on Cavuto or such, but hardly any mentions. In the meantime my local paper was covering busloads of people going to Tallahassee because they were losing their homes over Homeowners coverage.
I know it's a long post but this is something people out of FL have no idea has been happening here.
Global warming/s
My neighbor had some cracks appear in his stucco. He’s gone to a sinkhole attorney and has started the process.
Right. Changing weather patterns. Try changing groundwater use patterns. See how that affects underground waterways.
A friend of mine had a sinkhole, although there was no settling or home damage. The insurance company paid the house off. Then they discovered radon so he installed vents.
He finally sold it and made a nice chunk.
Although near us there are the strawberry fields. When they pump all the water for the cold weather they lowered the aquifer. There were a lot of real sink holes after that.
I live in FL, and did not realize the Sinkhole Lotto problem
Something has to be done with the insurance....businesses cannot relocate to FL if people cannot get insurance for their new homes and properties....besides the Citizens sham
The best way to handle this would be to outlaw any requirement for people to have property insurance. Nothing is more socialist than being forced to buy something
If insurance companies actually had to sell a product...the rates would go way down. As long as homeowners are forced to buy insurance...the insurers can name any price
Instead of taxpayer bailouts....how about bringing back RISK to the insurance companies. Sure, some will leave the state, but the ones who stay will have a large market to make money from
You aren’t required to have homeowners insurance by the government. You are required by your mortgage holder. No insurance and there would be no mortgage.
It would be cheaper to get rid of the lawyers. IMO, most of the damage is really settling due to poor construction. Occasionally a sinkhole will open up but those are obvious.
No insurance, no mortgage. Of course, you are free to lend to folks and not require insurance to protect your invested capital. Let us know how that works for ya.
re: outlaw any requirement for people to have property insurance
In our case the requirement for insurance is on the part of the mortgage company, not the State of Florida.
Our insurance tripled a few years ago and even at that we can find only one company that will write a policy for a frame house. I have very little faith in the office of the insurance commissioner. Every detail of what these companies do and what they charge should be scrutinized by that office! I am convinced a truly aggressive investigation into claims would turn up a LOT of outright fraud, etc.
I lived in Florida for 30 years, left in 2006.. So you can believe me when I say I paid the ridiculous insurance premiums. Mine went up 20% a year for a decade after Andrew. 40% a year for the 4 years proceeding our fleeing the state.
There is no law requiring homeowners insurance. It is demanded by lenders to protect their loan. I wouldn't loan anyone $150K for a mortgage if they had no insurance on the collateral (the home). That would be plain stupid. Nothing socialist about it. Socialism would be the government requiring banks to give you a mortgage with no HO insurance.
Pay off your mortgage, then you can cancel your HO insurance.
Of course! Silly me, I was debating between “Global Warming” and “Bush’s Fault”.
Attention Freepers -
Do NOT click on the Google ads for sinkhole attorneys - the law firms pay a “per click” fee to Google for the referrals (reputed to be as high as $20 with some types of cases).
So that’s why most insurers are eliminating sink hole coverage or raising the deductibles. I grew up in Central Florida. Those high ground former orange grove properties are full of dry aquifer holes. We’d ride our horses through these groves and discover all kinds of new sink holes every year. Very common. Most of the small lakes and ponds are the remnants of sink holes of decades past. Lake, Polk, Highlands and many other counties are full of them!
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