Policy option means savings
By DAVID DeCAMP
Published February 1, 2007
Florida regulators announced rate cuts Wednesday for Citizens Property Insurance Corp. customers who drop sinkhole coverage, including a bigger decrease than initially projected.
The savings will mostly affect Hernando and Pasco counties, where sinkhole claims have been the most abundant.
A Hernando homeowner with a $5,000 premium who drops sinkhole coverage would save $2,919, according to the Florida Office of Insurance Regulation.
A person with a $5,000 premium on a homeowners policy in Pasco could exclude sinkhole coverage and save up to $3,120, a 60 percent savings.
If a customer buys the optional sinkhole coverage with a 10 percent deductible, they would save $680 on a premium of $5,000, according to the insurance agency. Citizens wanted customers to pay more for coverage.
The state order applies only to state-run Citizens Property Insurance Corp. customers. Private insurers have to offer proposals by June to allow their customers to drop sinkhole coverage, too, under a law passed in January.
That law said insurers are required to cover catastrophic collapses. The once-standard coverage for sinkholes, which have driven up rates, would become optional.
The Florida Office of Insurance Regulation ordered rates for sinkhole coverage to be lower than projected earlier this week because of findings of a consultant's report last fall. It said the basic rate for sinkhole coverage should drop.
"Policyholders were already due some savings for sinkhole coverage," Insurance Commissioner Kevin McCarty said in a statement.
People with homeowners policies who live east of U.S. 19 in Hernando and Pasco counties will see the biggest cut. Customers in the wind zone west of the highway will see smaller discounts.
Condominiums and mobile homes are not included.
Reductions would be about 10 percent in parts of Pinellas and Hillsborough counties.
While lawmakers have lauded the changes, consumer advocates have warned the changes leave homeowners assuming higher risks.
Citizens must make changes to its proposed policy forms within the next 60 days and get regulators' approval again. Citizens spokesman Rocky Scott said the worst-case scenario is a 3 1/2 month wait for rates to drop, urging customers to be patient.
David DeCamp can be reached at 727 869-6232 or firstname.lastname@example.org