Saving money, taking a risk

Most homeowners, given the option, chose to go without sinkhole coverage.

By DAVID DECAMP, Times Staff Writer
Published January 13, 2008

ADVERTISEMENT State Sen. Mike Fasano said changes have saved customers $4.2-million on premiums.

Dropping sinkhole insurance coverage has quickly become a popular way to save money in Pasco and Hernando counties.

Citizens Property Insurance Corp., the largest insurer in the two counties, reported last week that 22,216 policies were renewed or rewritten in November and December in Pasco and Hernando. In that group of policyholders, 18,165, or almost 82 percent, dropped sinkhole coverage.

It's all about the money, say Citizens officials and area lawmakers.

Customers in some areas can save more than 50 percent by dropping the coverage, blamed for high insurance rates, particularly along the coast.

State Sen. Mike Fasano, R-New Port Richey, said changes have saved customers $4.2-million on premiums, based on reports by Citizens.

"I never thought it'd be the that much money saved in such a short period of time," said Fasano, whose district includes parts of two counties.

But there's another factor. Citizens automatically drops sinkhole coverage on renewals unless a customer requests otherwise.

State Farm Insurance, the second-largest insurer in the counties, also has made sinkhole coverage optional, but it hasn't automatically dropped the coverage when policies are up for renewal.

Spokesman Chris Neal said a lower ratio of State Farm customers have opted out compared with Citizens policyholders, although specific policy counts were unavailable Friday.

State Rep. John Legg, R-Port Richey, said the differences between Citizens and State Farm come down to geography. State Farm no longer insurers many people in the high sinkhole areas near the coast, meaning the potential savings from dropping coverage is less.

State Farm will not renew policies within a mile of the coast. About 500 remaining customers are left near the coast of Pasco and Hernando counties, Neal said.

Fasano and Legg won changes in Florida law last year to allow insurers to make sinkhole coverage an option instead of standard in homeowners policies. It shifts responsibility for all but catastrophic damages to the customer.

Times staff writer Jennifer Liberto contributed to this report. David DeCamp can be reached at ddecamp@sptimes.com or toll-free 1-800-333-7505, ext. 6232.

[Last modified January 12, 2008, 20:22:50]