County should opt for more info on sinkholes

Published February 15, 2007

There is palpable confusion surrounding the Legislature's changes to property insurance policies and premiums, and homeowners aren't the only ones befuddled. Just last week, two commissioners in neighboring Pasco County acknowledged they had failed to comprehend the intricacies of a presentation by the insurance expert they hired to ride herd on the recent legislation.

To counter the confusion, the Pasco Commission plans to launch a campaign to inform residents about the options - and the risks - of tailoring their insurance coverage.

That is a very good idea and the commission in Hernando County, where about 7,500 homeowners' policies, representing almost one-quarter of the market, are with the state-created Citizens Property Insurance Corp., should follow suit.

The bill passed by the Legislature last month was intended to reduce skyrocketing premiums by Citizens and other insurers. The centerpiece of the legislation changes the definition of sinkhole damage and gives customers the ability to decline that coverage in exchange for a rate reduction of 50 percent.

Under the new law, homeowners are to be advised of the changes in their policies by a bold-print notice indicating that their policies no longer include sinkhole coverage. That move would leave homeowners unprotected from potential damage unless the house is declared uninhabitable by a visible-to-the-eye sinkhole that opened within a seven-day period.

That is contrary to the stated wishes of Insurance Commissioner Kevin McCarty, who previously said customers should be given the chance to opt out of the coverage because of the risks to people who are not well-informed. Likewise, the state Office of Insurance Regulation recently ordered Citizens to make sinkhole coverage standard in policies unless customers sign the form opting out.

Pasco's expert, Timothy Volpe, helped draft the bill. He predicts customers won't sign the form and will fail to realize the substantial savings. He called it wrong-headed and promised to work to reverse the notification policy as part of the changes associated with an updated rate filing from Citizens. Pasco commissioners responded with silent acquiescence, but two of them later told the Times they actually wanted customers to sign forms opting out of coverage. Perhaps they should have communicated their wishes to their attorney.

Citizens Property Insurance Corp. paid $38.4-million on sinkholes in 2006, of which $34.7-million went to claims from Pasco and Hernando counties. The figures are routinely blamed on fraud, aggressive client-recruiting efforts by sinkhole-specialty attorneys and Citizens' inability or unwillingness to properly investigate claims. Still, the Southwest Florida Water Management District also identifies parts of the northern Tampa Bay region as prone to slow-developing sinkholes because naturally deteriorating limestone is close to the surface.

Lawmakers rushed through their solution before the provisions of earlier legislation, also intended to curb fraudulent sinkhole claims, had been put in place. In the aftermath, a public-awareness initiative is in order.

Hernando commissioners should instruct their staff to develop public-service announcements for the cable television Government Broadcasting Channel, as well providing updated information on the county's Web site. In addition, commissioners should consider mailing notices with utilities bills.

Homeowners need to be cognizant that reduced rates come with the assumption of greater risk. The Hernando Commission, which should be thankful that Pasco footed the bill for Volpe's services even though the stakes were proportionately high in Hernando, is now obliged to do all it can to ensure that information reaches the people who need it.