One of the many ways used by Citizens Property Insurance Corporation to prompt many of its policyholders to "jump ship" and seek coverage under the umbrella of private insurers has been to raise the deductibles for certain damages. According to tampabay.com, one very little known is the deductible for damages caused by sinkholes.
Very few people realize that last year a change took effect in Citizens' policies: all policyholders with sinkhole coverage are now required to pay 10 percent of their home's insured value before Citizens pays for any repairs.
Such was the case of Lee Crowe. In August he was trying to get his insurance company to pay for $23,000.00 worth of cosmetic damage done to his house by a sinkhole. Workers had already filled the sinkhole with $84,000.00 worth of grout. Yet, much to his dismay, Mr. Crowe suddenly found that when it came to repairing the damage to his home, he had a $20,600.00 deductible....
Before this change, the 10 percent deductible was only one option to reduce premiums. Christine Ashburn, a spokesperson for Citizens, has said that the change was announced via email to agents in March of 2012, taking effect on May 2012 for new policyholders and a month later for renewals. However, she stated, policyholders were notified before their renewal and given an opportunity to opt out and remove coverage for sinkhole damage.
According to the same Citizens' spokesperson, the change is part of an ongoing effort to reduce the number of claims for sinkhole damages that the company has to deal with each year. These claims have jumped to nearly 6,700 in 2010 from 2,300 in 2006. It is worthy to note that although Citizens collected $51 million in sinkhole related premiums during 2011, it paid out $136 million to cover sinkhole damage that same year.
Downsizing A Giant
It is important to remember that the company has been trying to reduce its customer base from its current 1.4 million policyholders to about half (approximately 675,000). In order to accomplish this goal, Citizens has been continuously rising rates and deductibles. This policy move is widely supported by Florida Governor, Rick Scott (R), and many other important State government figures who claim to fear that despite Citizens' enormous current reserves, it may not be able to survive a disastrous hurricane season. The company's reserves are estimated at approximately $6.2 billion thanks to the ever rising premiums and deductibles and several years without significant hurricane damages (not since Hurricane Wilma in 2005).
Read The Fine Print
An ardent critic of Citizens, State Representative Mike Fasano, a Republican from New Port Richey, has called the 10 percent deductible a "ploy to raise taxes through the back door without coming to the Legislature." He is considering legislation to either stop the new higher deductible or to give people a cheaper option.
Yet, for many (like Mr. Crowe) it may be too late. According to Taylor Yarkosky, owner of a sinkhole repair company, "your average working person between 30 and 50 years old probably doesn't pay attention (to their policy's details). They're not going to notice until a catastrophe happens that they go: 'What do you mean I've got to pay 10 percent?"
In fact, Mr.Crowe calls the move "sneaky" and claims he never received a letter explaining the change. Moreover, he said, "What they're doing to me is almost counting on somebody's irresponsibility as far as not reading fine print. We have all been programmed to not even read all that stuff."
Given the preceding cases, the lawyers of Greenberg, Stone and Urbano, P.A. have decided to help the members of our community review and understand their homeowners insurance policies at no cost or obligation to them.
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