One way to get cheaper rates is to buy an insurance policy that covers nothing. An article shows this is how the Florida legislature is tackling the insurance rate problem:

"[A] bill awaiting Governor Charlie Crist’s signature would allow for cancellation of private sinkhole coverage in Pasco and Hernando Counties — including hers. Under Senate Bill 742, private insurers could "non-renew" sinkhole policies beginning next year. In the same notice, insurers would offer sinkhole coverage as an add-on at a higher rate and require an inspection at the owner’s expense.

"It’s not a good idea, especially in Pasco and Hernando since it’s a very sinkhole prone area," said Bill Newton of the Florida Consumer Action Network. Newton fears insurers will raise rate so high that many homeowners will balk at the premium and inspection, choosing to go without sinkhole coverage.

"And sinkholes happen," Newton said.

New Port Richey Senate [sic] Mike Fasano, who helped write the bill, said it is modeled after a pilot program being tested by government-run Citizens Property Insurance and is intended to benefit homeowners.

"It’s worked very well," Fasano said, noting that Citizens’ overall property insurance premiums decline 45 to 50 percent when sinkhole coverage is dropped.

Fasano said sinkhole coverage is often just "bells and whistles" and that catastrophic collapses, such as those that swallow homes, are covered under homeowner’s policies even if there is no specific sinkhole coverage.

"If you want to have the cracks in your driveway, cracks in your drywall type coverage, that’s what we call the bells and whistles. And you’re going to have to pay extra for that," he said.

Florida Insurance Council Spokesman Sam Miller said on Wednesday afternoon that he was unable to immediately say whether insurers expect the bill to reduce their overall risk in Florida, which is often been described by the industry as a losing venture."

The bill arrived at Governor Crist’s desk and he now has until June 18 to act on the bill. If he does not veto the bill, it will become effective on January 1, 2010.

  • shirley heflin

    Well, if Mr. Fasano’s “on-line legal advice” is correct:

    “…Fasano said sinkhole coverage is often just “bells and whistles” and that catastrophic collapses, such as those that swallow homes, are covered under homeowner’s policies even if there is no specific sinkhole coverage…”

    Then, naturally, people are going to opt for the cheapest policy. Once again, as always, it’s the uninformed, ever trusting public that is the dominant prey of insurance companies, agents, adjusters, etc., et al.

    SHIRLEY HEFLIN

  • Shirley,

    Florida Senator Mike Fasano was quoted in this article and is a very well meaning politician.

    My impression is that he is so very concerned about the cost of insurance premiums that he sometimes forgets about the purpose of insurance–softening the financial blow by paying for losses and providing peace of mind that the unexpected loss is already taken care of because of insurance.

    Unfortunately, sinkhole losses in some parts of Florida are the number one financial risk to policyholders. And, it is a risk of loss that has significant negative financial impact outside of those immedidately suffering the loss. Entire communities and neighborhoods will have market values of their homes destroyed by sinkholes that are not fixed.

    So, on this issue, I respectfully disagree with Mike Fasano. I feel the law is bad public policy and will hurt those directly and indirectly suffering from the “cracking” that is so prevalent in most sinkhole damaged homes.

    Who is going to buy that type of home? People without this coverage will hurt themselves and everybody in their neighborhood as the cracking sinkhole damaged house cannot get sold, looks horrible, and eventually sells for far below market value.

    We need to spread that type of risk of loss by mandating the coverage across the state. This social aspect of insurance seems to get lost with some when analyzing the question of rates.

  • shirley heflin

    Thank you for your insightful response.

    You’re right. The “social aspects of insurance” when obtaining and/or paying insurance premiums, appear to get lost and most people are trying to save money during these hard times. That’s basically all it boils down to for the average person – how much money can we save right now? Not as a matter of financial responsibility, but as a NECESSITY.

    It’s ashame that we (a large majority of the population anyway) are in this situation, but we are and it is a reality.

    SHIRLEY HEFLIN

  • Shirley,

    The valid point you raise is the one Fasano is properly concerned with–people being able to afford any coverage.

    I just fall to the side of having insurance for the risk most dangerous. In Mike Fasano’s area, it is sinkhole loss and that is the one the proposed law now allows people to not obtain.

    In my view, penny wise and pound foolish. It will create a much larger problem in the long run.

    On the other hand, what would happen if people cannot afford to buy any insurance if sinkhole coverage is mandated as Fasano is concerned?