(Note: this Guest Blog is by Donna DeVaney, an attorney with Merlin Law Group in the Tampa, Florida, office. This is a series that she and fellow attorney Kristin Demers-Crowell are writing on sinkhole issues).
Senate Bill No. 742 was approved by the Governor on June 16, 2009, and took effect on January 1, 2010, as an amendment to Florida Statute 627.706. This amendment is important to note because it allows an insurer to non-renew an insurance policy which contains sinkhole coverage in Pasco County or Hernando County and instead offer coverage which only includes catastrophic ground cover collapse coverage. In other words, it is now the insurer’s option to remove the coverage in Pasco and Hernando counties.
Here is the relevant language that has been added to Fla. Stat. 627.706:
627.706 Sinkhole insurance; catastrophic ground cover collapse; definitions.—
(5) An insurer offering sinkhole coverage to policyholders before or after
the adoption of s. 30, chapter 2007-1, Laws of Florida, may nonrenew the
policies of policyholders maintaining sinkhole coverage in Pasco County or
Hernando County, at the option of the insurer, and provide an offer of
coverage to such policyholders which includes catastrophic ground cover
collapse and excludes sinkhole coverage. Insurers acting in accordance with
this subsection are subject to the following requirements:
(a) Policyholders must be notified that a nonrenewal is for purposes of
removing sinkhole coverage, and that the policyholder is still being offered
a policy that provides coverage for catastrophic ground cover collapse.
(b) Policyholders must be provided an actuarially reasonable premium
credit or discount for the removal of sinkhole coverage and provision of only
catastrophic ground cover collapse.
(c) Subject to the provisions of this subsection and the insurer’s approved
underwriting or insurability guidelines, the insurer shall provide each policyholder with the opportunity to purchase an endorsement to his or her
policy providing sinkhole coverage and may require an inspection of the
property before issuance of a sinkhole coverage endorsement.
(d) Section 624.4305 does not apply to nonrenewal notices issued pursuant
to this subsection.
Prior to this amendment, and still in counties other than Pasco and Hernando, an insurer was required to offer a renewal policy that contained sinkhole coverage, but the insured could opt-out of the coverage if he/she elected to do so. Without any action on behalf of the insured, sinkhole coverage would remain in the policy. That has now changed in Pasco and Hernando counties. For residents of those counties, I suggest you review your policy to see if sinkhole coverage has been removed. If your policy has not yet come up for renewal this year, please pay close attention to the new policy that is issued and any notices your insurer sends. This new law does give insureds in Pasco and Hernando counties the ability to purchase sinkhole coverage by way of endorsement for an added premium. If you have property in Pasco or Hernando county and you have a policy where sinkhole coverage has been removed by the insurer, you should consider paying the additional premium to have the coverage added back into the policy. Sinkhole losses are most often total losses. Without sinkhole insurance, a sinkhole can be financially devastating.