We can't catch a break. If the wind isn't howling from hurricanes, the ground must be collapsing from sinkholes.
Hence, the latest insurance crisis in Florida, where homeowners, public adjusters and attorneys are clamoring for settlement checks for what often are little more than settlement cracks.
This has sent our already reeling insurance market into a new tailspin.
And you will pay for it.
State Farm wants to raise rates 28 percent, in large part because of sinkhole losses.
The state-owned Citizens Property Insurance takes in more than 200 sinkhole claims a month, paying out about four times as much as in claims as it takes in from premiums. We all know what happens when Citizens runs out of money and can't pay. We pay.
Florida is renowned for its insurance scams, and this one is a doozy.
It is centered in an area known as Sinkhole Alley in western Central Florida. Almost 70 percent of claims come from Hillsborough, Pasco and Hernando counties.
You would think from the escalating claims — they have tripled from 2006 to 2010 — that homes are being swallowed like rats in a python cage.
In fact, that rarely happens. Catastrophic collapse is only involved in about 1 percent of sinkhole claims.
Most claims involve cracks.
We all have cracks in our house.
The question becomes when is a crack just a crack, and when is it "structural damage'' caused by sinkhole activity?
Finding that answer can kick off engineering and geological assessments that cost around $10,000. And even then, experts disagree, usually depending on who is paying them.
The end result often is a spat with the insurance company. Denial of claim. Threat of lawsuit. Settlement negotiations to avoid a trial.
There is a lot at stake. Fixing sinkhole damage is expensive because it often involves stabilizing the ground under the house, which can involve pumping grout into any cavities down there.
Going back five years, the average sinkhole payout, including expenses, is $130,000.
Now, here is the rub. When claims are paid, much of the money is never spent on the house or pumping grout in the ground.
About 20 percent, or more, goes to the insurance adjuster or attorney. The homeowner gets what is left. And investigations by insurance companies have found most simply pocket the money.
HomeWise Preferred Insurance Co. examined 55 claims and found that 79 percent of owners represented by an attorney or adjuster did not repair their homes. Almost 60 percent paid off their mortgage or sold the house.
One insurance company examined 53 sinkhole claims and found only five homeowners completed repairs. Seven of the nonrepaired homes were sold, meaning if there were problems, they simply were passed on.
Making all this considerably worse is that insurance adjusters and some attorneys aggressively solicit sinkhole business.
Consider this mailer that was sent out in a neighborhood:
TIME IS RUNNING OUT!
We have been successful in recovering large claim checks for several of your neighbors in Florida. Do you have cracking in your foundation, walls, floor pavement, or pool deck? If so, you may be entitled to a large insurance settlement …
I am an honest guy. But I'd have to admit that if this wound up in my mailbox, I might view those wall cracks from an entirely different perspective. I mean $130,000 is $130,000. And if everybody else is doing it. ...
This is scaring private insurers out of Sinkhole Alley because they can't pay out more than they take in, or they go out of business.
This means Citizens Property Insurance moves in to fill the void, putting the risk on taxpayers. Citizens Property now covers 61 percent of Hernando homes, where it pays out seven times as much in sinkhole claims as it takes in from sinkhole premiums.
You can bet that the epidemic of sinkhole claims will migrate into other areas of Florida.
This has to stop.
Legislators are looking at several fixes, one of which will effectively do away with standard sinkhole coverage. The law would remove the mandate that insurers provide it, except in cases of catastrophic ground collapse under residences.
I think the option of buying coverage as we know it will cease to exist in Florida. Not even Citizens Property will be required to offer it.
There are only two ways to avoid that. One is to sharply limit claims. The other is to allow insurers to sharply raise sinkhole premiums.
My preference is for the former solution. There are provisions in the bill to limit cracks claims. The trick is designing a law to weed out all the frivolous claims without tossing out the legitimate ones as well.
Here in the land of the scam, it is a familiar problem.
Mike Thomas can be reached at 407-420-5525 or email@example.com.Copyright © 2015, CT Now