Fasano talks homeowners insurance

State Sen. Mike Fasano talked about sinkhole insurance to the Citizen Police Academy Alumni Association during its January meeting at Safety Town.

"We've done some things over the last couple of years that I'd like to throw out at you that may help you reduce your premium," Fasano, R-New Port Richey, said to a crowd of close to 100.

Citizens Property Insurance, the state's insurer of last resort, offers homeowners the option of selecting full sinkhole coverage or just catastrophic ground cover collapse coverage, Fasano explained. Catastrophic ground cover collapse is when the home is deemed unsafe to live in, he said.

By selecting the catastrophic option rather than full sinkhole coverage, a premium can be reduced by 40 percent to 50 percent, he said. Some private insurance companies do not offer the catastrophic option, he said.

Citizens was created in 2002 to offer property coverage to Florida homeowners who had no other option.

"Citizens is no longer being seen as a last resort," Fasano said. "It's not like it used to be in the past, where you could only go into Citizens if there was no other choice. If a carrier won't give you a comparable policy of what Citizens will offer you, you can go into Citizens."

During a question-and-answer period, Dan Dede asked, "Can an insurance company mandate that you take sinkhole insurance? When I called up my insurance company, they told me I had to have sinkhole insurance. I said, 'No, I don't,' and they said they require it."

They can require it, but Fasano said it surprises him that they do, since it increases the carrier's risk while increasing the policy's cost.

Dede went on to say his carrier had since canceled his insurance.

"You were probably already on the list to get that six months' notice," Fasano said. "I would imagine within the next five to 10 years, everyone in this room will probably be on Citizens, especially here in Pasco County. There is a problem," he said, citing the fact that sinkhole claims paid out in Pasco County soared from a couple hundred thousand dollars in 2001 to $45 million in 2005.

Fasano also said the state now requires the insurance money paid out be used to fix the home.

"Sadly, many of those homes that were claimed for sinkholes and the insurance company paid them the limit, the people never fixed the sinkholes. They sold the house for 50 or 60 cents on the dollar, and now a home is sitting there that has a sinkhole that was never fixed and the rest of the community suffers for it," he said.

Jimmy Gardner said his insurance company, Nationwide, was going to drop his sinkhole coverage, which would lower his policy by $1,000. He had a sinkhole inspection done, which cost $140. He paid half and Nationwide paid half.

"They found no problem and I saved $1,000," Gardner said. "But if I want sinkhole coverage now, it's going to cost me $1,300."

Fasano said sinkhole coverage is probably going to get even more expensive down the road.

He also suggested other ways to reduce policy costs. Homeowners can increase deductibles on personal items and windstorm damage, which will lower the cost.

They can also include a windstorm mitigation discount.

An inspector, at a cost of $100 to $150, checks the home to make sure there are no problems that would increase the likelihood of windstorm damage. If there are no problems, the inspector fills out a form for the insurance company, and the premium should automatically be reduced by law on average 12 percent to 13 percent, Fasano said.

Another possible reduction is based on the value of a home.

If a Citizens premium indicates the value of a home continues to go up, and the homeowner knows the value is going down, he can have a structural appraisal done, which cost about $200.

If the appraisal is lower than the replacement cost Citizens suggests, they will take it. "We've saved people hundreds, and sometimes thousands, of dollars," Fasano said.

He said they can't force private companies to do it, but that's where a homeowner needs to challenge his agent.

"Go home and check your policy," Fasano said. "I urge you to challenge your agent, challenge your insurance company. Don't be afraid. Challenge, demand, ask questions."