Having Affordable Coverage
Florida Consumer Action Network (FCAN)
Public Sinkhole Workshop
Summary - August 18, 2007
HAC and FCAN hosted
a public sinkhole workshop on August 18, 2007 to inform the public about the
impact of upcoming changes in homeowners’ insurance sinkhole coverage. The
program included panel discussions between homeowners and experts on sinkholes,
insurance and legal matters. The workshop was held from 9 a.m. to 12:30 p.m. at
Spartan Manor in New Port Richey, Florida.
cooperatively discuss the Pasco/Hernando homeowners’ insurance issue, including
the pilot program, and explore possible alternative solutions with residents and
- To build
understanding about the Pasco/Hernando insurance pilot program.
identify unanswered questions that must be addressed for residents to be
fully informed about the program.
brainstorm ideas of how residents can protect their homes and keep costs
Stevans, President, Having Affordable Coverage.
Nickerson, Secretary, Having Affordable Coverage.
Newton, Executive Director, Florida Consumer Action Network.
Broderick, President, Earth Tech.
or Dale Hannicky, Geotechnical engineer.
Kulwicki, Mortgage lender.
Amend, State of Florida Division of Financial Services.
Burrow, Condominium owner.
Stevens, Manufactured homeowner
welcomed the group and discussed the purpose of the workshop.
thanked the attendees for coming, pointed out that the two groups wanted to get
the community’s ideas and take those to our government leaders. Facilitator was
Stevans led a
panel discussion that included John Burrow representing condominium owners, Wil
Nickerson representing Having Affordable Coverage and Wanda Stevens representing
manufactured homeowners. Dan Amend from the Florida Department of Financial
Services also participated.
pointed out that the pilot program doesn’t cover everyone since condos and
manufactured homes are considered commercial/residential property and required
to have sinkhole coverage. If condos opt-out of sinkhole coverage, the board of
the condo association is at risk. Burrow stated that the legislature’s decision
to exclude condo owners from the deductions is unjust.
1. Have condos reclassified as
Have condo association see if they
can drop coverage considering the fiduciary responsibility of the board and
financial risk of each owner for a repair, individual assessments and dues.
3. Consider self-insurance,
even though it is expensive and 80 percent of funds must be available.
stated that manufactured homes are also left out of the pilot program and are
seeing increases in premiums. She said that a problem for manufactured
homeowners is that they still need insurance on their homes and land under them
is co-owned. Amend said that there are few sinkhole claims on mobile homes and
not much of the rate goes to sinkhole coverage. It may only go down $50. Amend
said that the 2004 hurricanes devastated mobile homeowners. Amend said that
mobile homes are paying so much because of wind coverage for hurricanes.
1. Experts recommended that it
be acknowledged that there is no particular type of construction that makes you
immune from sinkholes since it is a geological issue.
2. Experts agreed that since
manufactured homes have fewer occurrences of sinkholes, they should get a better
said that homeowners continue to be told coverage is so high because of sinkhole
claims. She pointed out the Pasco County Assistant
Attorney, Elizabeth Blair is quoted saying “We have an effort underway to
recognize areas that have significant geological hazardous conditions.” Then we
have Florida's governmental agencies and geologist saying we have sinkholes, but
the pilot program suggests homeowners drop sinkhole coverage to save money.
She said that people should have the choice to take on
such enormous risk and not have it yanked from under them. HAC only
knows of two banks that will not require people to have sinkhole coverage. A
question came up about how to prove how long someone has had a sinkhole.
The geologist said that sinkhole activity takes
thousands of years to evolve. It was also noted by the expert panel that it has
been said that State Farm is looking into requiring a homeowner to test the area
to opt back in, once they have opted-out of
sinkhole coverage at a cost which can cost $7,000-$10,000. Once a
homeowner opts-out, the chances to get back in may not be good, she fears.
Amends could not confirm that if someone opts out it will take two years to get
back in and that Citizens insurance company will do some kind of investigation.
Amends said that sinkhole coverage does not transfer to a new owner.
1. Examine if there will be
penalties for opt-in at a later date.
2. Determine if banks will
require people to have sinkhole coverage.
3. Find out if Citizens is
going to require a test and if there are any costs involved.
4. See if there is a policy for
getting back in after you opt-out.
that he spoke with Senator Fasano and the Senator told Newton that his office
would be happy to take suggestions to Tallahassee. Newton said that FCAN has
been working on insurance for a number of years and has built a statewide
coalition. FCAN is also working with manufactured homeowners association. He
said the coalition will be able to take this workshop’s ideas to Tallahassee.
advised homeowners to check with insurance carriers to determine if they can
drop sinkhole coverage. He advised homeowners to keep sinkhole coverage,
especially West Pasco. Kulwicki stated that when buying a home, buyers should
investigate if a sinkhole occurred and if there was a full claim paid out it; if
so, it won’t be insured. Only a few companies will insure a house without
that over 20 years, he has conducted 5,000 sinkhole studies and found 40 percent
were legitimate. He defined catastrophic sinkholes as those with a visual hole,
structural change and the house condemned. He said that the average
stabilization cost to fix a home with a sinkhole is $40,000 to $65,000, not
including cosmetic repairs. He defined a sinkhole as ground surface expression
of some activity occurring farther underground.
Broderick, Earth Tech:
said his company comes in after engineers and does the work. His company’s
concern is that people are unprepared to make an informed decision on this
issue. Broderick conducted an informal survey and found that homes are three
times more likely to be damaged by a sinkhole than a fire. Broderick said people
need to understand the risks in order to make an informed decision on whether to
buy back coverage. Broderick said officials keep saying there is no sinkhole
problem, yet the county is pre-grouting and pre-stabilizing new construction
projects as a precaution to sinkhole occurrences.
State Division of Financial Services:
his organization tries to help people having insurance problems and try to
educate people facing insurance issues. Cost problems are all over the state.
His office advises that homeowners comparison-shop insurance every year. He
noted owners could determine their policy renewal date and call his office 30-60
days before for help finding a less costly alternative.
The workshop attendees were asked:
“What questions have yet to be answered about the pilot
program?” These issues came up as still unclear:
- Can we
change the pilot program?
- Can I
- What is
the value of opting-in? What are you going to get for your money?
- How long
will this pilot program last?
- Why is
it called pilot if it is going to last forever?
- How long
are rates frozen?
aren’t risks spread out across the state, if we are bearing the burden of
hurricanes across other parts of the state why can’t they bear the burden of
- Why do
people have to conduct testing if they choose to opt-in at a later date?
- Why were
Pasco and Hernando singled out?
- Is it
constitutional to separate out Pasco and Hernando from the rest of the
limit the lawyers and property adjusters?
Attendees were asked: “What do you think residents could
do to call this issue to the attention of their neighbors, other members of the
public, legislators, the media, etc?” Responses were:
Information being sent out is poor and does not effectively explain what
catastrophic means to your insurance policy.
confused about opting-in and opting-out.
- We need
to hold the legislature, governor and OIR accountable.
- We need
more uniform regulation of laws. Eliminate surplus lines.
- The more
we complain the more the issues are going to stay up there (in
- Hold a
Fasano should consult with geologists to be apprised of the situation as it
Insurance agents need to give better information.
Legislators are discriminating Pasco and Hernando.
Insurance situation needs to be revamped and legislature needs to encourage
insurance companies to come back to Florida.
involved with HAC.
informed, read the paper, tell your neighbors.
phone call committees. Write articles to newsletters for HOAs. Email the
New Port Richey city hall meetings and Pasco BOCC meetings.
to papers via letters to the editor.
media to all meetings at club houses.
bus to Tallahassee and this time get on the agenda earlier.
asked: “What solutions can government or the private
sector offer?” Responses were:
coverage should be transparent – itemized on the policy.
itemize your bill and in readable language.
issued should be available on county assessor’s website.
statewide sinkhole fund and spread the cost.