View this article online: https://www.claimsjournal.com/news/southeast/2006/10/03/72952.htm
Citizens Property Insurance Corporation has filed a proposal that could reduce rates up to 43 percent for policyholders in the most sinkhole prone counties who opt out of buying coverage for sinkhole related claims next year, according to Citizens President Bob Ricker.
“This is a new concept in coverage,” said Ricker after the changes in policy language were filed at the state Office of Insurance Regulation, which must approve the changes.
“It protects the consumer and will help re-establish private-sector coverage in counties affected by sinkhole claims.”
Ricker said final rate figures are not complete, but estimates show rates in Pasco County would decline as much as 43 percent and 32 percent in Hernando County for policyholders who exclude sinkhole coverage.
Citizens has about 180,000 policies in a five-county area on Florida’s West Coast prone to sinkhole claims, primarily in Pasco and Hernando counties.
Ricker said the filing, called a “form filing,” will change the language in most Citizens’ homeowners policies – with the exception of high-risk account policies – to allow policy holders to chose to buy sinkhole coverage.
He said the policy will pay for a home destroyed by a catastrophic ground collapse as part of the base policy even if the policy holder has purchased the optional coverage.
Choosing not to have sinkhole coverage means damage from a cracked driveway or foundation, for example, would not be covered.
Citizens paid about $40 million last year for sinkhole-related claims.
People who elect to purchase the optional coverage will see their rates increase. The coverage will have a 10 percent deductible, Ricker said.
Citizens customers outside the sinkhole area will see little or no change in their rates, Ricker said.
“We heard our policy holders loud and clear,” he said. “We supported sinkhole legislation that passed this year and our board of governors tasked us with a way to find rate relief for our customers. We think we have done that,” Ricker said.
The reduced rates and revised policy forms, if approved by OIR, are targeted for use on March 1, 2007.
Customers whose policies are renewed prior to March 1 would pay current rates and could receive a refund if they opt to cancel their current coverage and reapply under the lower rates.
Ricker said he hoped private-sector insurers would adopt similar policy language and resume issuing policies in areas with sinkhole problems.
He said competition would help reduce rates.
Source: Citizens