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Insurance headache more like a migraine

Home buyers and owners deal with sinkholes, the State Farm freeze and spiraling premiums. And one word has become more familiar: Citizens.

By JENNIFER LIBERTO

© St. Petersburg Times, published February 16, 2003


The search for reasonable homeowners insurance has become more depressing than those pesky sinkholes that send insurance companies running.

Real estate agents and builders insist that sinkholes are not a big problem in Hernando County. Last year, county residents reported 81 of them, according to the county Property Appraiser's Office.

Most homeowners here, though -- including those who may never see an actual sinkhole -- face the effects of the few sinkholes in the area when they go looking for insurance.

After a deluge of rain opened several sinkholes last year in the Tampa Bay area, insurers began raising premiums and refusing to renew policies in sinkhole-prone ZIP codes. Many Hernando and Pasco residents who lived within a mile of a sinkhole had to either pay up or look elsewhere.

A rise in claims for mold damage has also affected rates. On top of that, many insurers overextended themselves and wrote too many policies for Florida home buyers over the years.

New Hernando County homeowners have had few options, especially after the state's largest insurer, State Farm, stopped writing new policies last June.

So the homeowners insurance crisis continues.

"There's no choice. We're down to strictly one market: That's Citizens," said John Reddin of Economy Insurance Mart in Spring Hill. "It's pretty much a dead issue."

Citizens Property Insurance Corp. is the former Residential Property & Casualty Joint Underwriting Association and the insurer of last resort. By law, Citizens must insure those who cannot find coverage in the standard market. But the law also mandates that Citizens' rates remain higher than the market to encourage homeowners to seek other options.

Citizens has seen a "dramatic increase" in policies issued for what it calls personal residential insurance, spokesman Ron Natherson said.

That's no surprise to local insurance agents, who say they would be helpless if it weren't for Citizens.

"It's still higher than if I could put somebody in the standard market, but at least we're able to write a policy," said Lisa Wilson of the Wilson & Wilson insurance agency in Spring Hill. "It's unfair to people, but the wide array of markets no longer exists."

While continuing to refuse coverage for new homeowners in Pinellas and Hillsborough, State Farm has slowly begun to write a few new policies in certain counties, including Hernando. State Farm is allowing a small pool of new policies, until it reaches a 3 percent growth margin. After that, the company will stop, State Farm spokesman Tom Hagerty said.

In Pasco, the growth margin is zero, meaning agents can write a policy for someone only after someone else drops out.

For those who keep or get a State Farm policy, premiums have skyrocketed.

"State Farm is writing again, but their premiums are so high," said Evelyn Grauer of Grauer Agency in Spring Hill. A year ago, she could offer a new homeowner a policy from seven insurers. Now she, too, is down to Citizens.

"We were hoping the standard market would come to life again after the first of the year," Grauer said, "but so far it hasn't happened."

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