Security First Insurance - no more sinkhole coverage
 

Just an FYI for everyone: I got a phone call a bit ago from the insurance agency we've dealt with in regards to our upcoming homeowners policy renewal with Security First. It was a courtesy call to let us know that when our policy renews in mid-December, it will renew without the sinkhole coverage we've had for the last 3 years. The young lady said Security First will no longer be providing sinkhole coverage on any homeowners policies.

So I've got a call in to our agent to see if they can find us another company that will be able to provide us sinkhole coverage with their homeowners policy.

Bummer. Such is life sometimes! :sigh:

Bill :)

Let us know how it turns out. I don't think you will find any insurance companies writing new policies for sinkholes

WE have USAA and we just received our renewal homeowners policy. Our policy is with and renewed by USAA before they stopped writing Florida Policies...it is not an ASI policy..who has an contractual agreement with USAA.

Our renewal homeowners policy just went up 20% in premium and although we still have Sinkhole coverage (10% deductible) in addition to Catastrophic Ground Cover Collapse there are now 2 pages of added restrictions regarding a sinkhole/ground cover collapse loss claim. Such restrictions now specifically limit any claim to the principal residence (ie not the yard behind the residence, time limits of when to report damage, who pays for what to include testing for sinkholes, and finally a small kicker in the new policy that states "you may not accept any rebate from anyone dooing repairs specified in the endorsement."

Well that is interesting as I did our renewal last week for Security First and it did include sink hole coverage.

wonder if it will be there next year...last year allstate stopped sinkhole coverage

I wonder what will happen when a mortgage holder gets stuck with a house that has a sinkhole problem and the owners walk away. Will mortgage brokers stop lending in areas that are sinkhole sensitive?
Most basic policies cover catrostrophic ground collapse but before they pay the house has to be deemed uninhabitable. Our policy currently has sinkhole coverage but with a $25,000.00 deductible.
If the mortgage companies start demanding coverage will the insurance companies provide it or will we have a impasse?

You can still request sinkhole endorsement to your Allstate policy on renewal. Call your agent.

This is a business opportunity and I am sure that it will be recognized by some insurer. It does not make sense to drop all coverage when money can be made by charging special rider premiums and adopting separate higher deductibles.

If this makes too much sense, it is probably due to some state regulation that has boatloads of unintended consequences.

I have Security First also. I was notified that the sinkhole insurance would be dropped IF I did not have a sinkhole inspection. That cost $140 and Security First would pay $70 of the $140. If no sinkhole activity was found (no cracks, etc) I could get the sinkhole coverage with a 10% deductible. I contacted several other insurance companies and was told even if I had the sinkhole inspector give a clean report, I probably would not get coverage. My Security First is underwritten with GEICO.

They all went to great extent to explain what the difference between sinkhole coverage and catastrophic ground collapse coverage means.

Just purchased a policy for my new home. Happen to know a bit about insurance as I am an agent myself licensed in NY for about 30 years. Knew it was important to have the sinkhole coverage. Found it through AAA with ASI insurance. Was very satisfied with the product and the service from the agent.

Geico is an agent for Security First. Security First is an independent company that contracts through agencies in Florida.

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Interesting facts
 

It was announced yesterday that Citizens has requested premium increases. From 2008-2012 Citizens collected in sinkhole premiums 190 million dollars and paid out 1.2 billion dollars in claims.

Citizens? Is that an insurance company? Not the bank?

I don't do insurance in this family. I am in charge of world events.

We currently have ASI and do have sink hole coverage,however, we were advised that if we sold our home the new owner would no longer be able to purchase sink hole coverage. We were futher advised that the only sink hole coverage available in the future would be for new builds only. She did say that it might be possible to find an insurer that would write a sink hole policy but that the buyer should pay very close attention to what the policy provides and that it would be expensive.

I believe this to be true. It is what I have found in my inquiries.

If Citizens has not obfuscated those numbers, all that represents is bad management. I wonder how much of that $1.2 billion was underwritten by reinsurance?

I think that the upshot of this is that, when buying a house in The Villages or elsewhere in Florida, you should plan on self-insuring regarding sinkhole damage. (Even if you can get coverage, you are still going to be exposed to a deductible of 10% of the value of the dwelling.). Therefore, you want to be conservative about how much you pay for a house and make sure that you have enough cash or other liquid assets left over to cover repair costs if you have to repair sink-hole damage in the future. In this regard, you need to keep in mind that sink-hole damage in Florida is not a statistically insignificant risk-- which is precisely why insurance companies are withdrawing coverage.

I think they're referring to Citizens Property Insurance of FL that was formed in response to hurricane and other catastrophes that left people unable to get coverage:

"Citizens is a not-for-profit, tax-exempt government corporation whose public purpose is to provide insurance protection to Florida property owners throughout the state. The corporation insures hundreds of thousands of homes, businesses and condominiums whose owners otherwise might not be able to find coverage.

Citizens operates according to statutory requirements created by the Florida Legislature and a Plan of Operation approved by the Florida Financial Services Commission. The corporation is governed by a Board of Governors that administers its Plan of Operation. Florida's Governor, President of the Florida Senate, Speaker of the Florida House and the state's Chief Financial Officer each appoint two members to the Board.

Citizens has offices in Tallahassee, Jacksonville and Tampa. Tallahassee is the corporate headquarters for the organization. The Jacksonville and Tampa offices provide policy services and underwriting, claims, and customer support."

https://www.citizensfla.com
Citizens Property Insurance Corporation - Wikipedia, the free encyclopedia

"Self-insuring" for various events is a good idea....especially the part about being conservative as to how much one spends on a house etc. The whole economy is not exactly healthy and the wheels could fall off in various ways.

Household liquid reserves are important to maintain at any income level.

Here's a bit of an update:

I contacted our agent's office this morning. The young lady who took the call seemed to contradict what I was told in the call I received yesterday (different person) - it sounds like Security First will still offer sinkhole coverage but your house will have to pass an inspection. This ties in exactly with what Buggyone posted.

The troubling part for us is that we DID have a sinkhole inspection soon after we initially got the H.O. insurance with them 3 years ago. We didn't get the sinkhole coverage initially but quickly opted for it a couple of months later - had and paid for our half of the inspection, etc. and have had the sinkhole coverage ever since. I suspect they're perhaps looking at the info from when our policy was initially put in force and not seeing the info from a couple of months later when we had the inspection done.

I e-mailed them info and documents confirming the inspection and the payment for it. They're to get in touch with me after they review the situation.

Bill :)

Please let us know if you can get coverage without the 10%-of-dwelling-value deductible.

I went through this increase premium with additional cost for sink hole coverage two years ago. My agent told me then that other insurers would follow with some not offering sink hole coverage at all.

I have had this very insurance for several years now, and it appears to respect grandfathering in that it just renewed once again with the identical sinkhole coverage as in the past and continuing with a $500 deductible and no increase in premium. Will it continue in the future? Anyone's guess....

Hmmm, I have ASI through the Villages and my August renewal changed the sinkhole deductible from $500 to 10% of insured value. Had a modest premium increase, too.

Are you sure your deductible for sinkhole is still $500? I was under the impression ASI was changing all policies to 10%.

I dumped Travellers 3 years ago because they changed the sinkhole deductible to 10%... Now ASI has caught up with them

Oh well....

I also have ASI and was led to believe that they uniformly had changed to the 10% deductible.

My ASI August renewal also went from $500 deductible to 10%.

When calculating the 10% deductible is that on the home structure only, separate from the land? Can anyone give me an idea of what that would be for a designer that sells for around 300,000? ? I'm not sure how to tease out the actual structure worth.

What is your house insured for? If its $300K what you bought it for you are probably over insured. You should ask your insurance company to do a replacement cost calculation for your home.....what would it cost to build your home today from scratch. That would not consider the land. YOur deductible would be 10% of the reconstruction cost, if the house were to be considered totaled.. So if your land is worth $50 K and the house $250K your deductible would be approx $25K. It would not be 10% of the insured value but of the paid out value based on reconstruction costs.....but not to exceed your policy limit.

Here's the latest...........and the greatest!! :D

I got a call yesterday from the home office of our insurance agency (Brightway Insurance) apologizing for the time it was taking to work through this sinkhole coverage issue. Her update was that they'd spoken with a representative of Security First, explained that we'd already had a sinkhole inspection a couple of years ago, and was told that Security First had tightened their standards for what was to be checked, etc. during a sinkhole inspection - they had a new form for the inspectors to fill out to coincide with their updated inspection requirements. As I was told, they're making everyone wanting sinkhole coverage to have an inspection, even if they've had one in the past. But given that our inspection was fairly recent (~2-1/2 yrs ago), they were going to run it up the flagpole to see if they'd accept it as being current enough.

Another phone call received this morning.............and Security First accepted our previous inspection and we're good-to-go for the sinkhole coverage going forward. They'll renew the policy on schedule this fall with the sinkhole coverage included.

And to Advogado's question re: the 10% deductible - my understanding is that our deductible will remain at 10%, same as they had it set last year. It had been at $1,000 with our policy with them during 2011.

Bill :)

You are exactly correct. This began with the passage of Senate Bill 408 in 2011. This was intended to address fraud and abuses which were very common in Pasco County.

I got this information recently from Marlene O'Toole, and told her that I was particularly disappointed that legislation like this is passed without any prior knowledge or input by her constituents. This can have a big financial impact on folks and should not be a surprise.

It seems this kind of thing happens all the time, like the clause in recent legislation (supported I believe by Marlene) that allows CDDs to combine. What do you suppose was the impetus for that?