Pasco County, Fla. Sinkhole Claims Motivated Citizens to Request 124 Percent Rate Hike

September 26, 2005

Sinkhole occurrences in Pasco County, Fla. have caused Citizens Property Insurance Corp. to raise its rates west of U.S. Highway 19 by an average of 124 percent. For homes east of the highway, rates would rise an average of 66 percent. The increases are the highest Citizens has requested in any of Florida’s 67 counties.

Without sinkholes, the state’s insurer of last resort told the St. Petersburg Times, the Pasco rate increase would have been below the state average of 32 percent. Citizens request indicates it expects to pay tens of millions of dollars in sinkhole losses in the coming years.

Last year, Citizens reported it paid more that $17 million in sinkhole losses. In contrast, it expects to lose $3.3 million losses in hurricane losses in an average year.

Citizens staff and the county property appraiser’s office told the Times it’s likely that some damage attributed to sinkholes can actually be blamed on poor construction. Yet owners of these homes are collecting sinkhole reimbursement because the insurer cannot prove the absence of a sinkhole.

“The fact is that it’s very difficult to prove a negative, that a sinkhole is not the cause,” Citizens spokesman Justin Glover told the Times. Sinkholes occur underground as the delicate lacework of limestone and caverns give way, crumbling driveways and cracking walls and foundations.

Pasco has 25,140 homes covered by the state-run insurer, a number growing rapidly as private insurers retreat from the county’s sinkhole-plagued properties. Only 1,000 homeowners were forced to buy the company’s highest-priced policies in all of the Tampa Bay area four years ago.

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