In an attempt to stay with the sinkhole theme of our latest BLOGS (Found on our website - www.thewelchgroup.NET), I wanted to give some details on what you should know about insurance when purchasing a sinkhole home. I recently worked on a home insurance policy for a client of ours that was purchasing a repaired sinkhole home and I thought it would be a perfect time to explain the nuances of these types of homes. To the best of my knowledge, there are only three carriers in Florida that will write a home that has had a prior sinkhole loss. One of these carriers does not care if the home has been repaired or not, unless you are wanting to add the Catastrophic Ground Collapse (See previous BLOG) coverage to the policy. Otherwise, they simply exclude all coverage for earth settlement and movement. The second carrier has no restrictions on whether or not the home has been repaired or not, except that the claim can not have occurred in the last three years. If the claim did occur in the last three years then they will not insure the home at all. This carrier will in fact provide Catastrophic Ground Collapse coverage if the home qualifies based on the above criteria. The last carrier, Citizens (State of Florida insurance company), will in fact insure the home if you have proof that the home and its subsequent damage was completely repaired. This includes but is not limited to: photos, pre-reports, post-reports and repaired receipts. Applications are then submitted to Citizens unbound with the aforementioned documents for underwriting review. If approved, Citizens will send the applications back to the agent bound. The Citizens process can take anywhere from 5 to 20 days assuming that all of the necessary documents are received. Typically, a complete sinkhole file will consist of anywhere from 30 to 90 pages depending on what was actually done on the home. Documents must be in an electronic format in order for Citizens to receive them.
What's least expensive? Often times the cost of insurance for a sinkhole home is typically more expensive than it is for a home that has not had a sinkhole claim regardless of whether of not the home has been repaired. However, most homes that have had a repaired sinkhole will typically sell for less money than a non-sinkhole home. With that said; Citizens Typically has the least expensive rates of any of the three carriers but is more restrictive in their underwriting guidelines. In addition, their underwriting process can be very frustrating and tumultuous at times. I have literally had clients give up half way through the Citizens sinkhole process and go with one of the other carriers for more money. The other two carriers are much more efficient in their underwriting process and allow us to issue policies at the agency level if the home qualifies.
At the end of the day if you are purchasing the home at a good price it sill may be a good deal regardless of the insurance premium. However, insurance premiums on a sinkhole home should always be something to consider.
Should you have any further questions on sinkhole homes or any other type of insurance please contact us at 727-835-1500.