Sinking Premiums Could Cause Sinking Feeling for Florida Homeowners

Sinkholes pose a significant threat to Florida homeowners. A new law allows private insurance companies to cut sinkhole coverage in order to lower premium prices.

Due to Florida’s unique geology, sinkholes form here more often than in any other state in the US, and many of these sinkholes are located near the I-4 corridor in Central Florida. Because of this distinctive situation, Florida homeowners should consider electing sinkhole coverage when purchasing new policies or adding coverage to their existing policies. Failure to do so may result in a significant financial burden and overwhelming personal loss.

A new Florida law, effective January 1, 2010, allows private insurers to drop some portions of sinkhole coverage in order to cut the cost of premiums. It is Mandatory that ALL “Admitted insurance companies selling homeowners insurance in Florida offer customers catastrophic ground cover collapse coverage. Catastrophic ground cover collapse coverage will protect a homeowner in the event that there is an abrupt collapse in the ground cover that can be seen by the naked eye, there is structural damage to the building or foundation, or the structure is condemned and residents are instructed to vacate the premises by the appropriate government agency. Because of this many companies have ceased offering any homeowners’ coverage in some areas and counties.”

This new law allows some Florida insurance companies to non-renew or charge extra for a sinkhole coverage endorsement. Without this endorsement the policy will not provide homeowners with reimbursement for losses due to settling or cracking of a foundation, building, or structure. A large majority of sinkholes do not have catastrophic effects that result in structural damage or lead to a building being condemned. Many sinkholes actually result in less significant damage, but even repairing this damage can put a financial burden on your family. Insurance companies are not required to provide insurance that covers sinkhole damages not listed under the catastrophic ground cover collapse coverage.

Florida homeowners can retain sinkhole coverage for an additional premium, a premium that will likely cost homeowners hundreds of dollars per month.

Although electing additional sinkhole coverage may be costly, the expense is worth the risk for those who live in an area that is prone to sinkholes. Discuss your coverage possibilities with a licensed homeowners’ insurance agent. Doing so will ensure that your family and your belongings are protected against the significant damage that sinkholes might cause.

Milla Tawnie writes for Orlando auto insurance and Orlando home insurance agency, the Florida Insurance Group. To learn more or to get auto and home insurance quotes, visit

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