You may recall I wrote about Citizens Insurance recent Sinkhole Policy changes. I recently moved out of my own primary residence and decided to make it into an investment property, and thus had to get a new insurance policy that covered the tenant living in the property. I’ve had Citizens insurance for quite some time. I applied for a new policy with sinkhole coverage with Citizens and they sent an inspector out to look at the property at a cost of $90 to me. The only thing found were cracks in the driveway (normal in Florida!), however their report showed the nearest sinkhole claim was .21 miles away. I got a letter in the mail yesterday that they had denied my request for a policy. What? “Now what?” I emailed to my insurance agent. Should I apply with other carriers, each time paying $90 for another inspection? This was my insurance agent’s reply to me:
“I hadn’t replied yet because I have been doing a lot of research, and wanted to be able to have more information. Since the new sink hole rules went into effect on October 1st, I have submitted 3 requests for sink hole insurance. All three have been denied coverage, including yours. As you may have heard, Citizens was denied the sink hole rate increases that they wanted. They lose about two hundred million a year on the sink hole side of the policies and a lot of it has to do with fraud. My opinion is that they are just making it almost impossible to get the coverage in the first place. Here’s another effect, the two other denials I received were both new home buyers that were using the bond program via Fifth Third Bank. They are required to carry sink hole coverage by the bond program. Guess what, no closings, no home ownership for them because the sink hole coverage was denied. I haven’t been able to find one company in the State that is willing to sell a stand alone sink hole policy. My feeling is that the more people hear about this, the angrier the public will become again. It is a brand new program, so not many people have had to go through the inspection yet. I do not carry sink hole on my own home, but I know that I wouldn’t be able to if I wanted. My driveway has cracks too. If that is grounds for denial, there is something badly wrong with this process. I’ll keep you posted. Thanks.”
As if our market wasn’t challenging enough with short sales, foreclosures, tougher lending standards and more – now Citizens is adding a new way to slow down the process of closing by denying coverage. I mean seriously – some lenders will not issue a mortgage without a Sinkhole Insurance policy in place, thus crushing some would-be homeowners dreams and slowing down the Florida real estate market’s recovery further. If you are angry about this, please tell Citizens, and our State government. You can call Citizens at 888.685.1555 and you can email Governor Rick Scott about this issue here. Or better yet, sign the petition on Change.org to bring some exposure to this issue.