Sinkholes won’t go away. While policyholders, insurance companies and governmental leaders fantasize that this peril would sink into oblivion, nobody’s magic wand will make this a reality. Hurricanes and sinkholes will happen in Florida because of the geography and geology. As more people who live and work in Florida, more losses will result.

The Tampa Tribune recently ran a story on this in Other Side in Sinkhole Controversy Responds. Some of my views were quoted in the article:

"The insurance industry does not like for sinkholes to happen because they hurt profits," William "Chip" Merlin, Jr., president and the founder of Merlin Law Group based in Tampa, remarked. The resident suffers a big drop in a home’s value.

"The problem is that people in Pinellas, Pasco, Hernando and Hillsborough counties are in the sinkhole capital of the United States," Merlin continued. "Now that so many more people live here, it is only natural that more sinkhole losses show up. It is a tragedy. For anybody to suggest that attorneys cause this is insurance company propaganda.

"The way it works now is that the insurance industry has passed laws that create fights where the rules are in favor of the insurance company before the claim was ever submitted.”

A past President of the Florida Association of Public Insurance Adjusters (FAPIA), Dick Tutwiler, was also quoted:

"There were sinkholes back then," said Charles R. "Dick" Tutwiler of Tampa, who began his insurance career 37 years ago. He is now a licensed public adjuster who handles sinkhole cases in nine states.

"This is not a new phenomenon in Florida by any means," Tutwiler added in a phone interview. "Mother Nature has given us this (sinkhole-prone) geology out here and all of a sudden we’ve built on top of it."

A lot of people try to downplay the severity of the sinkhole, Tutwiler added. The more common type of sinkholes might make it so doors and windows don’t open, not cause a house-swallowing catastrophic sinkhole.

"Sinkholes are the worse thing that could happen to your house," Tutwiler commented. The cause is underground and difficult at times to detect, unlike clues left behind after a fire.

Tutwiler believes residents with sinkhole problems need good advice. "If the policyholder doesn’t have an advocate, they have to do it on their own. They’re going to be handicapped."

I agree with his comments.

The way the current sinkhole laws work in Florida, policyholders need legal representation. Thanks to the insurance industry lobby, our Legislature passed laws making it much more difficult to prove the existence of a sinkhole loss. And when a sinkhole is found, the recent legislative changes make it much more difficult for policyholders to fully collect for the loss sustained. A good example of how the insurance industry is trying to make laws even worse for policyholders suffering from sinkhole losses is explained in my post, Sinkhole Proposed Law Only Pays Policyholder 25% of Available Coverage–Lessons of How the Insurance Lobby Spins a Message.

Florida Senator Mike Fasano has a constituency geographically located in the middle of sinkhole central. It is a no win proposition for him, and I bet he wishes I could waive a magic wand and make this insurance nightmare go away. He is rightly concerned that people cannot afford to purchase property insurance because the sinkhole peril is driving up rates. At the same time, when a sinkhole occurs, it is the worst predicament a homeowner can face. My views and respect for Senator Fasano are noted in Senator Fasano Defends His View Regarding Opting Out of Sinkhole Coverages:

I wonder how our clients, the Leeds, would feel if they had purchased only catastrophic sinkhole coverage or no sinkhole coverage, rather than the normal sinkhole coverage required when they purchased their "all-risk" insurance policy. Their home slowly but surely cracked, drooped, and sank over several years before it was condemned. If they "saved" money on their premium as Florida Senator Mike Fasano successfully pushed for in legislation, they would have lost the entire investment on their home. They would also still owe money on the mortgage, possibly causing bankruptcy.

I like and respect Senator Mike Fasano. He worries about the people without a lot of financial means. He is a good public servant who is not trying to use his office for personal financial gain.

While we see eye to eye on many issues, I respectfully disagree on the issue of allowing policyholders to "opt out" of sinkhole coverage. It is a very risky proposition–like opting out of "cancer treatment" to save on health insurance premiums. Chances are you won’t get it. But, if you do…..

I believe that if you cannot afford homeowners insurance which would fully protect you from probable losses, you cannot afford the home. Insurance is merely a mechanism to spread the cost losses you cannot afford. If the frequency and severity of those risks mean higher rates to account for the probable losses, they will have to be paid one way or another. In sinkhole prone areas, there is no “free lunch” in the long term.

We need to address building codes which harden structures to protect them from sinkhole damage. While we are addressing hurricane mitigation efforts, there should be a greater emphasis placed upon structures built in areas of known sinkhole occurrence.