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Sinkhole Policies Drop In Pasco

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By CHRISTIAN M. WADE, The Tampa Tribune

Published: January 12, 2008

NEW PORT RICHEY - Thousands of homeowners in "sinkhole alley" are going without coverage.
Less than three months after Citizens Property Insurance Corp. stopped automatically offering standard sinkhole coverage in Pasco and Hernando counties, thousands of Pasco residents have chosen to go without it.

Of the 22,760 policies renewed with the state-run company in Pasco County between November and December, at least 18,165 customers declined to carry the coverage, Citizens spokesman Rocky Scott said. That translates into a $4.2 million combined savings for them, he said.

"It's been hugely successful. Obviously, there's a lot of people who don't want to pay the extra money for sinkhole coverage," Scott said.

In coming months, Citizens expects more customers to drop the coverage.

"Then you're going to see some major reductions in premiums," Scott said.

Figures for the number of Hernando County policyholders forgoing standard sinkhole coverage aren't yet available. But Scott said customers there have seen about $1.1 million in overall reductions.

Those who want the coverage can "opt in," he said, but it costs extra.

In other counties across the state, Citizens customers must opt out if they don't want sinkhole coverage. But, even then, Citizens still covers "catastrophic ground collapse" when a sinkhole destroys a house, Scott said.

"People are still being covered," he said. "And they're saving money, big money."

Sen. Mike Fasano, who pushed for the policy changes, said the number of homeowners choosing not to pay for sinkhole coverage is an indication the new system is working.

"It's just the beginning," the New Port Richey Republican said. "If this trend continues, we'll be seeing a 10 to $12 million reduction in premiums in these two counties."

Pasco and Hernando have the distinction of being part of "sinkhole alley," an area prone to ground settlement and voids. Sinkholes range from small depressions to gaping holes, although typically they do not swallow homes.

Despite that, the number of sinkhole claims has increased dramatically in recent years.

In 2001, Citizens paid $180,000 in sinkhole claims. In 2005, that figure was close to $45 million. Of the 1,067 claims Citizens handled last year, 510 were in Pasco County, 281 were in Orange County, 158 were in Hillsborough County and 82 were in Pinellas County.

Of the 1.3 million Citizens policyholders, more than 52,000 live in Pasco.

Not everyone is pleased with the change in sinkhole coverage.

Ginny Stevans, president of Having Affordable Coverage, said the Pasco-based consumer advocacy group supports efforts to reduce fraudulent sinkhole claims, but disagrees with the opt-in approach for Pasco and Hernando.

"They're not really giving people a choice," she said. "They're just dropping them."

She said ditching thousands of sinkhole policies is a dangerous move.

"They're trying to get rid of the fraudulent claims - that we understand," she said. "But the problem is, in Pasco and Hernando counties we live in a sinkhole-prone area."

Reporter Christian M. Wade can be reached at (727) 815-1082 or cwade@tampatrib

.com.

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