SOURCE: Florida Justice Reform Institute

Florida Justice Reform Institute

May 17, 2011 17:52 ET

Florida's Business Community Praises Gov. Scott for Signing Property Insurance Legislation

Key Provisions of the New Law Will Reduce the Number of Sinkhole Claims

TALLAHASSEE, FL--(Marketwire - May 17, 2011) - Today, Governor Rick Scott signed sweeping property insurance legislation badly needed in Florida. The legislation addresses many issues facing our catastrophe-prone state and included key provisions that will lower insurance costs by reducing the prevalence of unfounded sinkhole claims while ensuring that there is compensation available for homeowners who have legitimate sinkhole claims.

"The new law signed by Gov. Scott today is a significant step toward lowering insurance premiums for all homeowners in Florida," said William Large, president of the Florida Justice Reform Institute (FJRI). "There were a number of deficiencies in our property insurance laws that were creating an avenue for a dramatic increase in sinkhole claims," Large added.

Over the last decade the number of insurance claims seeking coverage for sinkhole damage has risen at an alarming rate. Most of these claims are the result of minor damage to a structure that may or may not have been caused by a sinkhole.

Unfortunately, because it is frequently difficult and costly to determine whether a sinkhole is the actual cause of damage, insurers often entered settlement agreements with policyholders for far more than a claim is worth, rather than contest dubious claims and risk exposure beyond the limits of their policies.

In recent years, the number of sinkhole claims increased nearly threefold from 2,360 in 2006 to 7,244 in 2009, according to a 2010 Office of Insurance Regulation report on sinkhole data. Additionally, claims weren't being limited to central Florida counties, where sinkholes are more common. Insurers saw a significant increase -- 700% -- in claims being filed by residents in Miami-Dade and Broward, according to the same report.

"There was no geological reason for the increase in claims -- that is, sinkholes are not forming more rapidly or in new locations -- there was merely the knowledge by consumers that they could abuse the system," Large said. "The changes this new law will bring out will dramatically reduce the number of sinkhole claims and ensure that money paid on legitimate claims is used to repair and retrofit homes vulnerable to future sinkhole activity," Large added.

Contact Information

  • Contact:
    Allison North Jones
    (850) 320-6167